Southwest Case Question Answer

Contents

I) Executive Summary 2

II) Questions and Answers 2

1. Is there anything that you find particularly impressive about Southwest Airlines? 2

2. 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? 4

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? 10

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? 12

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 there any policies, procedures, and operating approaches at Southwest that you disapprove of or that are not working well? 14

6. What weaknesses and problems do you see at Southwest as of mid-2010? 16

7. Does the AirTran acquisition make good strategic sense for Southwest? 19

8. What strategic issues and problems do Gary Kelly and Southwest executives need to address as they proceed to close the deal with the AirTran acquisition and contemplate how best to integrate AirTran's operations and AirTran's employees into Southwest? 20

9. What recommendations would you make to Gary Kelly and Southwest executives as the company heads into 2011? 23

I) Executive Summary

Southwest Airlines Co, operating as Southwest Airlines, is the largest low-cost carrier in the U.S. headquartered in Dallas, Texas. The airline was established in 1967, adopting its current name in 1971, and as of June 5, 2011, is the largest airline in the United States based upon domestic passengers carried. The key that lies behind its astonishing success is its excellent strategy as well as the application of unique management. The process of crafting and executing policies as well as difference in the way of operation and management of the company will be analyzed carefully. Besides, the analysis will analyze the critical issues that Southwest has had to face to recently, especially the acquisition of low cost airlines AirTran, as well as suggestions for the development of the southwest in the future.

II) Questions and Answers

1. Is there anything that you find particularly impressive about Southwest Airlines?

There are two things that make Southwest airline so impressive: their strategy and management.

Low-cost strategy

Southwest management executes a very exact and reasonable strategy to develop the company from their starting point. It is the strategy that focuses on reducing ticket price and makes flight more affordable to all customers. Great efforts are made directing to this strategy. The company uses one type of aircraft - Boeing 737s to minimize the cost and time. It was the first company to introduce ticketless system on its website, which just cost $1 instead of $3 or $4. Also, Southwest's point to point scheduling of flight is more cost - efficient than the hub -and - spoke system used by rivals, etc. Additionally, Southwest executes many programs focusing on releasing additional fees, saving time for passengers and improving technology as well. Southwest has a lot of unique ideas, which help minimize their operating costs, and thus, provide customers the best possible price. The measures continuously aim at a single goal - offering a price which was as low as possible while still maintaining service quality.

Management

CEOs and other top leaders in Southwest are very talented people. The most noticeable person among them is celebrated CEO Herb Kelleher. Instead of managing from his office, Kelleher preferred working directly with employees to encourage them timely. His style raised familiar feelings among employees and his sense of humor was an important factor making him a celebrity in the company.

At Southwest, management strives to do things in a manner that would make Southwest employees proud of the company. Company executives are very approachable, insisting on being called by their first name. Employee-led initiatives are common. To illustrate, an employee had suggested not putting the company's logo on trash bags and this suggestion was highly considered and implemented, leading to $250000 saved annually.

Southwest also has different idea from almost all companies. They have a strong belief that, employees come first and customer come second. The high strategic priority placed on employees reflects managements' belief that delivering superior required employees who not only were passionate about their jobs but also knew that the company was genuinely concerned for their well-being and committed to providing them with job security. Southwest's thesis is simple: keep employees happy then they will keep customer happy. Therefore, all affairs relating to human capital in Southwest are concerned very carefully:

* Southwest hired employees for attitude and trained for skills. Employees did not only work for Southwest but they also lived for Southwest. They possessed a warrior spirit, led with a servant's heart and had a Fun- LUVing attitude. They are the people who fought to win, worked hard, were dedicated, and had a passion for customer service.

* The hiring staff at Southwest analyzed each job category to determine the specific behaviors knowledge and motivations that job holders needed and tried to find candidates with the desired traits. To test for unselfishness, Southwest interview team typically gave a group of potential employees ample time to prepare five-minute presentations about themselves; during the presentations in an informal conversational setting, interviewers watched the audience to see who was absorbed in polishing their presentations and who was listening attentively, enjoying the stories being told, and applauding the efforts of the presenters. Those who were emotionally engaged in the presenters and giving encouragement