Southwest Airlines Business Strategy Analysis

This assignment delves into the successful business strategies employed by Southwest Airlines. It examines their unique culture, leadership, employee treatment, and cost-leadership model. The analysis also explores the sustainability of their strategy in the face of industry challenges and proposes potential international expansion avenues for the airline.

Running Head: MARKETING MANAGEMENT 1
Marketing Management Case Study:
Southwest Airlines 2011

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Table of Contents
Answer 1:.........................................................................................................................................3
Answer 2:.........................................................................................................................................4
Answer 3:.........................................................................................................................................4
Answer 4:.........................................................................................................................................4
Answer 5:.........................................................................................................................................5
Answer 6:.........................................................................................................................................5
References........................................................................................................................................6

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Answer 1:
Airline Industry has always been an industry of interest to many business people, professionals
and academics because of economic effect of the industry. The attractiveness of US airline
industry can be analyzed by using some of Porter’s forces;
Threat of New Entrants
In United States airline industry, entry barriers were softening pre 9/11 due to government
deregulation laws and policies. Low cost carriers were able to distinguish their services through
their pricing strategy.
Bargaining Power of Suppliers
It was possible to overcome the supplier’s power by using the cheaper airports and reducing the
charges for landing space.
Industry Rivalry
Prior to 9/11, the rivalry among airline industry was intense because all the players are
competing for similar customer base and it has reduced the attractiveness of US airline industry
(Hannigan, Hamilton & Mudambi, 2015).
9/11 terrorist attack has been a major shock for the US Airline Industry and this event had a large
impact on internal and external environment of this industry. After this attack, the industry has
lost approximately $30 billion. It is the fact that this event has rebuilt the operating environment
of the sector. Political environment has also changed post this terrorism attack.
However, domestic airline industry in US has experienced increasing operating income, but it is
still less cost effective and profitable than other industries in country. The industry is facing
service problems, which need to implement some new regulations of competitive practices of
airlines. In this country, travelers were frustrated because of more offensive security processes
(Cameron, 2017). The costs of fuel were also uncertain and new entrants put the pressure on
executives. These factors indicate that attractiveness of US airline industry is moderate. There is

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the need of improvement in some areas of industry. The government should take some initiatives
to enhance the attractiveness of US airline industry.
Answer 2:
In US Airline industry, Southwest Airlines had made several efforts to overcome the negative
impact of 9/11 attack. The organization has implemented effective strategies, like; it has focused
on building its management team. It has found out that there are two types of travelers, i.e. time
oriented, convenience travelers and price sensitive leisure travelers. By focusing on these target
audiences, Southwest Airlines has developed the pricing strategies in two tiers accordingly. In
this way, the organization has been implemented cost leadership strategy. In addition to this, it is
using effective marketing and promotion strategies and posting attractive ads with impressive
tagline (Asahi, & Murakami, 2017).
Apart from this, the company has established an effective work culture and treated its employees
with respect and equality. It has developed the organizational culture, which places the
employees as first customers and travelers as second customers. Because of this, employee feel
extremely motivated to operate the flights according to the schedules and treat the passengers in
a friendly and effective way. Thus the strategies, which are critical to the success of Southwest,
are focus on short haul trips, lower fares and on time services to its customers.
Answer 3:
There are various reasons behind the success of Southwest Airlines in US. The major reasons are
like; its cost leadership strategy, innovation, effective management, culture and customer
intimacy. Southwest Airlines has developed three categories of fare, which include higher fare
for the business professionals. The organization has made various innovative changes in its
operations and processes such as; renovating the gate areas, which will include power ports,
television monitors, seas and new tables, new boarding procedures etc. In addition to this, it
focused on promoting the two bags fly free campaign (Inkpen, 2011). One of the most effective
success factors is that Southwest Airlines is emphasizing on its employees and encouraged them
to become more innovative. Thus, there are the reasons, why Southwest Airlines is successful in
US Airline industry.

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Answer 4:
Southwest Airlines is using very unique strategy to stay competitive in the US Airline Industry.
There were so many firms, which tried to imitate its business model and strategy, but they were
unsuccessful. From the case study, it can be analyzed that Southwest Airlines has implemented a
successful strategy via its unique culture, strong leadership and excellent treatment with
employees (Johnson, 2016). These are the major competencies of this airline, which make it
more difficult for other players to imitate strategy of Southwest effectively. It was the first airline
to introduce the internet page and enabled online tickets sale. Thus, it can be stated that it is
impossible to imitate its strategy as there are many unique facts, which is the foremost reason
behind its success.
Answer 5:
This unique strategy of Southwest Airlines is sustainable because this organization is able to
sustain its low cost strategy, but current business environment poses some threats like;
technology advanced airlines, possible loss of operating productivity, investment on gate
construction. With this strategy, Southwest Airlines will be able to generate more profits and
revenues and have strong position in US Airline industry (Potti, 2017). By enhancing the morale
and productivity of employees, the organization will be able to contribute the industry
effectively. Thus, the strategy of Southwest Airlines is sustainable and it will allow the
Southwest Airlines to maintain its position as most strongest and prosperous airline in United
States.
Answer 6:
After looking at Southwest’s strategies and operations, it can be said that Southwest Airlines
should become an international airline. The organization should expand its business to new and
attractive destinations. For this, Southern American nations, Canada, Caribbean Sea and Islands
of Mexican Golf will be the new potential markets. In these countries, the firm will have more
business opportunities for growth and success. Recently, the organization has introduced its
flights to many northeast airports, inclusive of New Hampshire, Long Island and Hartford. Till
2011, this airline had not expanded the business in any market outside the United States (Zou,
Elke, Hansen, & Kafle, 2014). The organization had made changes in its services and operations

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and implemented effective pricing and marketing strategies. These are the major factors, which
give it potential to become an international airline and operate business in above mentioned
destinations.
References
Asahi, R., & Murakami, H. (2017). Effects of Southwest Airlines' entry and airport
dominance. Journal of Air Transport Management, 64, 86-90.
Cameron, K. (2017). How Southwest Airlines challenged a global crisis. The Business &
Management Collection.
Hannigan, T. J., Hamilton III, R. D., & Mudambi, R. (2015). Competition and competitiveness in
the US airline industry. Competitiveness Review, 25(2), 134-155.
Inkpen, A.C. (2011). Southwest Airlines. Thunderbird School of Global Management.
Johnson, J.L. (2016). Opinion: Nine Reasons Why I Think Southwest is the Best. Retrieved from
https://www.airlinereporter.com/2016/05/opinion-nine-reasons-southwest-best/.
(Accessed on 25 January 2018).
Potti, R. (2017). Southwest Airlines: Successful And Sustainable For Long-Term Investors.
Retrieved from https://seekingalpha.com/article/4105293-southwest-airlines-successful-
sustainable-long-term-investors. (Accessed on 25 January 2018).
Zou, B., Elke, M., Hansen, M., & Kafle, N. (2014). Evaluating air carrier fuel efficiency in the
US airline industry. Transportation Research Part A: Policy and Practice, 59, 306-330.