Case presentation: SOUTHWEST AIRLINES

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

Textbook, articles and additional sources

Textbook

N. Topic Chapter Page

1. Company strategy; Ch. 1 pp. 3 – 7
competitive
advantage
2. Mission Ch. 2 pp. 24 - 26

Scientific articles/books

N. Title Author Journal Year, number Link

1. Positioning S. J. Miles; Business Horizons 2005, No. 48
Southwest Airlines W. G. pp. 535-545
through employee Mangold
branding
2. Developing G. Sadri; Journal of Management 2001, Vol. 20 No.
corporate culture as B. Lees Development, 10, pp. 853-859.
a competitive
advantage
3. Spirit and J. Milliman; Journal of Organizational 1999, Vol. 12 No.
community at J. Ferguson; Change 3, pp. 221-233.
Southwest Airlines: D. Trickett; Management.
An investigation of B. Condemi
a spiritual values-
based model
4. Workplace A. Rego; M. Journal of Organizational 2008, Vol. 21 No.
spirituality and Pina e Change 1, pp. 53-75
organizational Cunha Management.
commitment: an
empirical study
5. Southwest Airlines Arhtur A. From the book: “Crafting International
in 2014: Culture, Thompson; and Executing Strategy” Edition 2016
Values, and John E.
Operating Gamble
Practices.

Additional sources (company disclosures, web pages, video etc)

N. Title Author Journal Year, Link

number
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1. Funny https://www.youtube.com/watch?v=pvdCFYLf_JI
steward
Southwest
Airlines
rapping
safety
information.

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 ANSWER AND RECOMMENDATIONS N.1
Write your answer and be critical not descriptive

As Jack Welch taught “if you don’t have competitive advantage, don’t
compete!”. So, in crafting a strategy you need to think to compete differently.

With this clear assumption in mind I can argue that, of the Southwest Airlines
I particularly appreciated the strong evidence given to the corporate culture’s
aspect that distinguish this company airlines from others. I consider that the
importance given to the culture together with the respect given to the
employee branding process can be deem as the two sources of Southwest
competitive advantage.

It is true that culture is an intangible concept, but however it is central in a

company’s life and can become a strong competitive advantage whether
developed well. Besides, corporate culture can be perpetuated through
tangible means like symbols, slogan and stories. Southwest worked well in
this sense; for instance, LUV and red hearts always appear in the company’s
posters and banner ads. In organizations, storytelling is used as a means to not
only share knowledge and values, but develop trust and generate emotional
connection too. Obviously, as Sadri and Lees explained in their research
article ‘Developing corporate culture as a competitive advantage’, culture has
to be positive; thus a culture with values constructive that has to reflect not
only the corporate vision but above all the personnel values. In other words:
to work well, a culture has to convey the individual values of the employees.
For this reason, Southwest takes care of the hiring process and chooses people
with the right attitude, that is preferable to people skilled. The trick is in the
company’s ability to sustain in the time a positive culture; if it succeeds in
this task, it can enjoy many benefits. The main elements of Southwest culture
are: warrior spirit, servant’s heart and fun-loving attitude. They worked hard
to develop in the better way possible these 3 pillars. In fact, they have
instituted committee, culture service teams and culture ambassador to ensure
that company’s culture stays alive and so that it is always up to date.
Southwest has established also rewards to such employees that demonstrated
a Southwest spirit. Awards like Heroes of the heart and Kick Tail rewards
people who made positive difference in a customer’s travel experience or in
the life of a co-worker.

Learning is an activity stressed in Southwest strategy and it is considered a

never-ending process. They train the personnel with the aim of leading people
to acquire a self-awareness and to become an intentional learner always
pointed toward a personal growth. For this reason, there are various courses
on public speaking, decision making, leadership, stress management,
corporate culture, customer service and so on. Everyone had to know how to
‘Live in the Southwest way’. Finally, another central key of Southwest’s
company culture consists on celebration and conviviality. Southwest’s history
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is full of fun, creative events and activities like the SWAG (Southwest
Airlines Gratitude); in the latter employees can cumulate points through good
and fun actions and then they can use it to purchase varied merchandise.

Berret, have attributed Southwest’s success to employees, because he believes

in employee branding as a winning process. This process is based on the idea
by which, who work in an organization internalize the desired brand image
and then is motivated to project the image to costumers and not only. It can
happen just whether culture and values are shared and whether
communication between different hierarchy levels is open and exchangeable.
As a result, it is really important to transmit messages inside the organization
that reflect its mission and vision, because as Grant (1998) found: ‘companies
to be profitable, workers must see a connection between their job and the
company’s mission’. As demonstrated in the study “Workplace spirituality
and organizational commitment: an empirical study”, to reach higher
performance, a company need to develop affective and normative bonds with
their employees. But, more in deep, which are the benefits for the company?

First of all, we have to bear in mind that no CEO will accept and internalize
a strategy if it does not take to a positive result in terms of profit! So,
spirituality and culture in organization were introduced and stressed by
Southwest because have had the potential to strengthen the organization. In
fact, if the employees identify themselves on the corporate culture, the work
environment becomes pleasant and personnel morale grows. As a result of
this positive atmosphere, can be required to the employees to work harder and
be flexible and, in return, they do that just to sustain the pride to be active part
of something, farther more they develop a strong sense of duty. Under
everything there is the philosophy that happy employees are more productive
too. Everything of the information that I gave to you, can be strengthening by
the factual data, that means: lowest turnover rate in airline’s companies,
absenteeism almost nil and few customer complaints. For that reasons
Southwest put employees first; it is expected that workers, almost by osmosis,
extend love, respect and other positive values that they have received, back to
company’s customer. It is expressly declared in Southwest mission that high
level of customer service is central. It has to be crystal clear that employees
desired brand image can be considered a competitive advantage just when it
is perceived also by customers and more, the two images has to be consistent.
The last benefit to mention is that, besides, motivating workers through
incentives and company culture is a way to drive company costs down;
Southwest ask a lot to its employees and in return provides them with
financial or non-financial rewards.

So, we have understood that the environment in Southwest is informal,

relaxed and with a genuine sense of spirit and affection. In this regard, there
is a story from a new Southwest’s hostess who tell that in another airlines
company she was corrected because she laughed too loudly. Now that she
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works in Southwest Airlines she feels more herself. In fact, in the company’s
philosophy mistakes are not punished but used as teachings; Southwest’s
management can give a feedback to the person involved in the fact, with the
aim to turn failures into personal growth.

To conclude we can agree with what is reported in the article ‘Spirit and
community at Southwest Airlines’ that argue: “Southwest is widely viewed
as having a very strong set of values which shape its corporate culture” and
we can add that adopting such a strategy, they won.

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IND
QUESTION N.2
N.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?

Textbook, articles and additional sources

Textbook

N. Topic Chapter Page

1. Low cost provider Ch. 5 From pp. 118 to 125
strategy
2. Launching strategic Ch. 6 From pp. 145 to 149
offensives to
improve a
company’s market
position

Scientific articles/books

N. Title Author Journal Year, number Link

1. Positioning S. J. Miles; Business Horizon 2005, No. 48
Southwest Airlines W. G. pp. 535-545
through employee Mangold
branding
2. Southwest Airlines Arhtur A. From the book: ‘Crafting International
in 2014: Culture, Thompson; and executing strategy’ Edition 2016
Values, and John E.
Operating Gamble
Practices.

ANSWER AND RECOMMENDATIONS N.2

Write your answer and be critical not descriptive

I would give a grade of 9 out of 10 to the management that crafted a winning

low-cost strategy, starting company’s activity from the ground and entering
in a market that was not at all a blue ocean one. In fact, in Southwest Airlines
story, I was really impressed by its start. When Rollin King decided to
undertake this adventure in Texas, the market was full of rival airlines that
tried to block the new entrance company. The special intuition of R. King was
to catch the needs of people, in this case the category of businessmen. In fact,
many Texas businessmen complain about the price and the time-consumption
in reach the cities of San Antonio, Dallas and Houston with the airlines active

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in those routes. King didn’t miss the chance! He knew that an offensive
strategy can work if the rival is VULNERABLE and that a sign of
vulnerability includes unhappy buyers! So, what to wait for? Southwest
launched strategic offensives through offering better product at a lower price.

The low-cost provider strategy adopted by the Southwest Airlines worked

also in the most difficult period, for example in 2008 when rival airlines
instituted a series of add on fees because of the skyrocketing cost for jet fuel.
To sustain a low-cost strategy, you need of sure a low-cost operating
structure; the 3 main actions taken by Southwest to reach this objective are:
using a single aircraft type for all flight (Boeing 737), creating efficient route
structure and perform the value chain in a cost-efficient way.

Contrary to rivals, Southwest maintained always prices without fees and used
the technique of price elasticity for example in the routes where otherwise
would have had empty seats. It’s a mistake to think that aggressive price
cutting by itself is a good strategy. Indeed, higher unit sales do not
automatically translate into higher profit; unless the added gains in unit sales
are large enough to offset the loss in revenues due to lower margin per unit
sold. In Southwest’s case, price elasticity proved that the revenues gains from
increased ticket sales and the volume of passenger traffic would more than
compensate for the revenue erosion associated with low fares.

Of the Southwest’s strategy I liked the decision to put employees at the 1°

place and customers at the 2° one. It is a smart principle because if people
work in a place that take care of him, he will transmit this positiveness and
kindness to the customers. As reported in the Business Horizons’s research
cited above ‘employees working in this environment feel empowered to solve
customer problems (…) and know their efforts will be supported and
rewarded.’ There are countless example to demonstrate that for Southwest’s
company People is central and, together with fun and love attitudes to
customer, it is a key to competitive advantage. The effort to have a personnel
outgoing and with a fun attitude it was important for the Southwest’s CEO
Kelleher but also for Barrett. Anyway, as others, also Southwest Airlines is
not perfect and, in my opinion, it was less respective and tasteful, the decision
to gain market visibility through hiring long-legged flight hostesses and make
them dress with hot-pans and high heels. But, it is a friction based to the fact
that I’m a woman that live in 2018 and I can’t stand with this vision of the
woman that media give. Though it is a long issue. Without doubts, everything
in Kelleher plans had a reason and the reason to select women with these
characters was all but random: the women selected had the right attitude.
Kelleher strongly believe that is better to have ‘an unskilled person with a
good attitude’ to ‘a highly skilled person with a bad attitude’. In fact, quite
every flight assistant choose was a former majorette or cheerleader so they
were oriented to welcome the customers joyfully.

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Maybe you are asking to yourself: have you give a 9 grade to the management
just because of this ethical gap that separate you from Kelleher’s thought?
Not exactly. There is another important issue that I have not deeply deal in
this paper, but that my team and I have developed in a general question. And
it is the following one. The biggest blemish of Southwest regards one of the
five strategic objectives: be the safest airline in the world. Right now, we can
argue that the Achille’s heel of Southwest Airlines is the flight safety. The
last episode of April 2018 is just an instance of that; it was a fatal accident
with a female passenger death, nearly sucked from the cabin. Maybe, as
investigators said, there was a fault in the engine’s fan blade. But, already in
2005 there was an incident; a Southwest’s aircraft was unable to stop before
and rolled onto an highway, crashing into a car, killing one occupant and
injuring 22 passengers of the flight. In the last decade, the reputation of
Southwest in this field cannot be considered among the best. To regain my 10
grade and its image reputation, Southwest has to work on it. Recognize its
own weaknesses is the first step to take. Then, of sure, the company will have
to invest on safety, scheduling maintenance more frequently, using newer
equipment to reduce the probability of equipment failure, adding new figures
for checking deadlines and avoiding belated in inspections, introducing more
experienced personnel and more intensive training programs. In conclusion,
in my opinion it is important in these days to regain the lost trust through all
means (above all on the web) with the aid of storytelling’s power.