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Southwest Airlines: Culture, Values, Strategies

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Southwest Airlines: Culture, Values, Strategies

Case Study: Southwest Airlines in 2008: Culture, Values, and Operating Practices

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

The most impressive aspect of Southwest Airlines is their culture and how the culture supports the strategy of low cost airline. The spirit, which originated from the company establishment with all the litigations involved, has been developing with the company. The "warrior" attitude endorsed and encourage by Herb Kelleher in combination with fun-loving character, family-like atmosphere that start at the hiring process and are carried into daily routine play an enormous role in creating a certain customer experience and adding non-financial value to the Southwest fares and flights that ultimately help with overall company's competitiveness. The value that company places in its people is also amazing. People are the main asset for Southwest Airlines. This strategic move is especially important in business where customer satisfaction is vital. A genuinely happy employee will be providing genuinely courteous service with sincere care about a customer.

2. What grade would you give Southwest management for the job it has done in crafting the company's strategy?

a. What is it that you like or dislike about the strategy?

b. Does Southwest have a winning strategy?

The way Southwest positioned on the market and found their niche, as well as their ability to fight off the competition deserves an A. The profits of the company have been consistently growing even during the years when other major airlines were experiencing crisis. Low cost-low price no frills strategy proved to be very efficient. The specific approach of maintaining fleet of the same time of aircraft (Boeing 737) allowed the company to control costs associated with inventory of the spare parts, training of the maintenance personnel. Choosing smaller airports closer to the city centers rather than aspiring for bigger airports also allows the company to keep the fares low while attract more passengers. The faster turnaround time for the planes in combination with smooth boarding procedure decrease delays.

In my opinion, Southwest's strategy has already proved to be a winning strategy starting from the operations planning and running, employee relations and training, media campaigns. Nonstop flights and steady expansions, especially to the areas abandoned by other airlines shows that Southwest strategy is really oriented to a long-term profitability.

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

Customer service and customer satisfaction are believed to be critical from Southwest's point of view. The company made a special effort to arrange most interactive and friendly employees to work at the gates. In 2007 Southwest transformed the gate experience making it a little more comfortable for the passengers. Bottom line, one of the core company's value – fun is ingrained not only in the service provided, but in personnel selection and operations. The Southwest way implies having "warrior's spirit, servant's heart and fun-LUVing attitude". The hiring procedure demonstrates that the only right people with the right kind of attitude can get on board. At the same time, when it comes down to some financial statements, Southwest's approach is very traditional, and it reflects in the stable growth of the profits.

As I have already mentioned, using one type of aircraft significantly helps in curbing spare parts and training expenses. If a certain part in unavailable, it is easy to substitute it by removing it from another aircraft that is not scheduled to depart yet. Therefore, the delays can be decreased. According to the Exhibit 13 p.C-429, in 2008 Southwest was 78.5% on time – the best results compared to other major airlines. Special procedure for boarding also allows the company to have faster turnaround of the planes. Expansion into new geographic markets in combination with adding flights were the competitors decrease their flights, shifting planes to routes with good growth opportunity also contribute to increasing company's profits while keeping the costs low.

People are the greatest asset for the company, and Southwest employs practices that would result in employee's loyalty – such as no-layoff policy, promotion from within, etc.

4. What are the key elements of Southwest's culture?

Southwest

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