Case 3-1

Southwest Airlines Corporation

1. What is Southwests strategy? What is the basis on which
Southwest builds its competitive advantage?
Southwest follows low cost leadership strategy. Southwests strategy is to
improve efficiency and pass cost saving to its passengers by offering them
low prices. The bases on which Southwest builds its competitive
advantage is by putting employees first. Employees first philosophy
helps the organization to keep its employees highly engaged, which in
turn motivates the employees to serve the customers better resulting in
high customer satisfaction. Loyal customers in turn result in generation of
revenues for the company, thus increasing shareholder value. Southwest
has lowest operational cost due the various initiatives taken to cut cost.
This helps it to offer lowest fares. Southwest flies point to point unlike
other airlines which use hub & spoke model. It uses a short and medium
haul approach. Crew is paid per trip. Pilots are unionized independently,
allowing them to fly far more hours than pilots at other airlines, who are
nationally unionized. It useless congested airports, which helps it ensure
fewer delays. The turnaround time from landing to takeoff and crew
required is lesser (approx. 20-25 minutes & required a ground crew of 4+2
people by the gate, as against United Airlines which took about 35mins &
a ground crew of 12+3 gate agents). 80 % of its passengers fly on nonstop flight routes. This helps to save flight time, operate more flights, cut
other additional cost on crew, gas and maintenance. Low employee
turnover rate helps Southwest to save on cost of hiring and training. About
60% of Southwests passenger revenue was generated by online booking
via Southwest.com resulting in cost, time and manpower savings.

2. How do Southwests control systems help execute the firms

strategy?
Southwest strives for goal congruence. The actions people are led to take
in accordance with their perceived self-interest are also in the best
interest of the organization. Southwests control systems helps in
influencing behavior of its people in a goal congruent manner. Its control
system help execute the firms strategy of low cost leadership by
implementing short haul and medium haul, encouraging on-line booking,
ensuring lesser time spent at the gate, hedging fuel and oil(It used
hedging for 85% of its fuel & oil needs & saved about $455 million). It has
an open and inclusive culture. It boosts of a culture of hard work, high
energy, fun, local autonomy, and creativity. The hiring process at
Southwest is unique. Peers screen candidates & conducted interviews.
E.g.: pilots hired pilots, gate agents hired gate agents etc. Also, it initiated
the 1st profit sharing plan with its employees in the U.S. airline industry,
through which the employees owned about 10% of the company stock.

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These initiatives have helped in developing feeling of ownership in

employees. Southwest has a charismatic leader in CEO Herb Kelleher.
Southwest encourages pro activeness by providing recognition to personal
initiatives taken by its employees. It ensures task control thorough
automation (e.g. 60% revenue through online booking, Ding! The desktop
application that provides customers with exclusive deals). Southwest
consistently tries to find ways to improve its efficiencies and pass on the
cost savings to its passengers.

outhwest Airlines Corporation is an airline company that was founded in

Texas through the customer service business on June 18, 1971, Southwest
could be argued that this is the most successful airline in the United
States. Southwest also has one of the best customer service record.
Southwest has a different implementation strategies with other airlines.
The implementation of the different strategies are: the approach used is
short-haul or short stretch and approaches a point-to-point or point-topoint, not having a seat that has been allocated, according to the route to
pay their crews, using less congested airports, reservation online via
southwest.com, pilots are not recruited into the national union, foundation
officers fewer, shorter turnaround time, lower employee turnover, new
hire screening process performed by each employee in each position. With
the implementation of this strategy may be the Southwest's most
successful airlines.
Focus
The focus in this case is the implementation of the strategy undertaken by
the Southwest flight that is different from the other company, which in this
case is described differences in strategy undertaken by Southwest in
doing business with other airlines.

Indo
Southwest Airlines Corporation merupakan perusahaan penerbangan yang
didirikan di Texas melalui bisnis pelayanan pelanggan pada 18 Juni 1971.
Dapat dikatakan Southwest ini merupakan perusahaan penerbangan yang
tersukses di Amerika Serikat. Southwest juga memiliki salah satu dari
rekor pelayanan pelanggan terbaik. Southwest memiliki penerapan
strategi yang berbeda dengan perusahaan penerbangan yang lain.
Penerapan strategi yang berbeda tersebut diantaranya: pendekatan yang
digunakan ialah short-haul atau trayek pendek dan pendekatan point-topoint atau titik ke titik, tidak memiliki tempat duduk yang telah
dijatahkan, membayar awaknya menurut trayek, menggunakan bandara
yang kurang padat, reservasi online melalui southwest.com, pilot yang
direkrut tidak menjadi serikat nasional, petugas landasan yang lebih
sedikit, waktu penyelesaian lebih pendek, tingkat pergantian karyawan

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lebih rendah, proses penyaringan karyawan baru dilakukan oleh masingmasing karyawan di setiap posisi. Dengan penerapan strategi ini
Southwest dapat menjadi perusahaan penerbangan tersukses.
Fokus
Fokus dalam kasus ini adalah penerapan strategi yang dilakukan oleh
Southwest yang berbeda dengan perusahaan penerbangan yang lainnya,
dimana dalam kasus ini dijelaskan perbedaan strategi yang dilakukan oleh
Southwest
dalam
menjalankan
usahanya
dengan
perusahaan
penerbangan yang lainnya.