Southwest Airlines, Inc. Term Paper

Southwest Airlines, Inc.

Southwest is an impressive company on many levels. Most notably, it's determination to do whatever it takes to get the job done stemming from its original battles to begin operations make the company flexible in meeting the demands of a highly dynamic industry. Secondly, the company fosters innovation and has been very creative in being a leader in transforming the industry. Some of the most important examples include its ability to facilitate rapid turns, early leadership in online ticket bookings and "outrageous" marketing campaigns.

Thirdly, the belief that the employee comes first and that customer satisfaction will follow has boded well for Southwest. It's "hire for attitude, train for skills" and People Department reinforce this airline's dedication to making the working environment as enjoyable as possible. This combined with an open door policy and lean management layers promotes a strong sense of ownership and team accomplishments. Southwest consistently appears on Fortune's list of most admired airlines because its can do attitude, innovation, motivated workforce have propelled the company to be profitable for nearly thirty years even though it competes in an industry that is vulnerable to economic cycles that typically have large effects on the bottom line of airlines.

Southwest is a company with few visible weaknesses, but does have room to explore opportunities related to price elasticity in the industry as well as online sales. Currently, the airline has recognized that there are time-sensitive and price-sensitive customers and has developed on-peak/off-peak pricing schedules to reflect this. However, this is just the tip of the iceberg in exploring what options customer are willing to pay for such as assigned seats and business class cabins, features that other airlines exploit to boot their margins for every seat-mile they fly. The case doesn't reveal the fact that Southwest doesn't partner with other online travel such as Travelocity and Microsoft's Expedia.The airlines states that it doesn't do so because it can't control the service a Southwest customer gets from the online agent nor can it guarantee the ease of buying a ticket online. But, other online sites have also figured out how to make online ticket purchases simplistic and Southwest is missing out on a very important sales channel. As a personal note, I've forgotten to check the Southwest's site after shopping online for tickets many times.

Southwest deserves a 'B+' grade for crafting its company strategy which is to be a low-fare, short-haul, point-to-point carrier with reliable and friendly service. This strategy has not changed since the airline's formation and the company's management is adverse to long-term planning and analysis because it believes that the airline is too dynamic for this type of activity. The strategy has obviously worked for the Southwest for decades for two major reasons. It has been able to best the competition by delivering value at a lower cost. And, the larger airlines have been content not to aggressively target Southwest niche market, instead concentrating their efforts on higher-fare, longer-haul, hub-and-spoke business models. It's not clear if Southwest's bread-and-butter market will stay off the radar screen of larger carriers especially given the aftermath of September 11. Although Southwest believes that its industry is unique, just about every industry in today's global economy is subject to rapid change and most have short-term and long-term strategic planning. Southwest needs to do likewise and should consider the very real threat of increase competition by the likes of American and United.

Cost cutting has been essential to the successful execution of Southwest's strategy. It keeps its maintenance costs low by flying only one type of aircraft, Boeing 737s. It further reduces….....