Strategic Management Case Study: Southwest Airlines Analysis

This case study provides a comprehensive analysis of Southwest Airlines, examining its strategic management practices within the context of the airline industry. The study assesses the company's current situation, including its operational environment, competitive landscape, and financial outcomes. It identifies key issues such as economic fluctuations, technological advancements, and the need for strategic adaptation. The analysis delves into Southwest's competitive strategies, including its acquisition of AirTran and its focus on cost management. The study then proposes alternative solutions to address the identified issues, such as cost management, market expansion, and organizational restructuring. Recommendations include focusing on hedging, international market expansion, and decentralization to enhance operational efficiency, revenue generation, and long-term success in the competitive airline industry.

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Case Anaylsis of Strategic Management
(A Study on Southwest Airlines)

STUDENT NAME 1
Introduction
Strategic management refers to the formulation of planning, analysis, monitoring and
assessment required by the firm to meet specific objectives and goals. The paper has
focussed on the southwest airline of United states which one of the leading airlines. In
addition, the main focus has been given over the environment where the firm conducts its
operation. Moreover, it includes a competitive situation as well as strategies of the firm.
Furthermore, it has focussed over the financial results and identification of specific issues
associated with the firm. The paper has also concentrated over recommendations which are
essential for solving the problems of the firm.

STUDENT NAME 2
1. An assessment of the current situation of the firm.
1.1 The environment overview of Southwest Airlines and the industry
Southwest Airlines, which was founded in 1967, belongs to the airline industry of the
United States. There are several updates of the current environment in the industry, which are
affecting the business of the organization. Economic, technological, and social-cultural forces
are considered as the environmental factors of the industry. The economically weak growth
can affect the business model of Southwest Airlines. It lowers the purchasing power of the
airline industry. In this way, the industry cannot buy newer products to develop their product.
Southwest Airlines is well known for its low-cost airline; the provides higher capacity and
frequency flights to maintain a sustainable profit (Alamdari and Fagan 377) .
In the United States, there several technological issues that have been solved in the
current time. Technologies must be developed in order to create the best quality airline
service in the industry. Southwest airlines have invested a lot to enhance their technologies to
deal with the external factors which can affect the business. As the airline industry has to
work in international areas, so it is the prime responsibilities for them to get familiar with the
different situation of various countries. Macro-environmental factors are changing daily in
the current world. The industry has to update their work culture to develop the best service
around the globe to sustain in the problematic world environment. Southwest Airlines have
taken multiple initiatives to optimize the cost management of the organization (Basu 22).

STUDENT NAME 3
1.2 The competitive situation and strategies of the firm, including its financial
results, to identify the key issues that must be addressed
The internal factors are recognized as the strengths of Southwest Airlines, which
eventually contribute to the advantageous business competitiveness along with its very high
operational productivity in an efficient manner (Cook). The strategy is required to move to a
competitive business from administrative business by the firm. To be innovative and advance,
it is essential to identify the policy of the firm by including its market, marketing, and
mechanical behaviour (Flouris). In 2011, the airline acquired AirTran for 1 billion dollars
which can be considered as an advantageous tactic of the organization to make more profits
beneficially. Since then, the strategic outlook of the organization has made a change as it
transformed the objectives and scope of the firm. The advancements in operational
productivity in an efficient manner can be accomplished through the utilization of more
inputs in the firm. The organization has been able to sustain its improvement for efficiently
achieving maximum profitability. Apart from that, the development of the market is
minimally responsible for the growth of Southwest Airlines (Scotti, Dresner and Martini
139).

STUDENT NAME 4
2. A description of the alternatives to address the issues identified, followed
by detailed recommendations.
Southwest Airlines have many strengths that would assist in making the business
much more profitable with comparative advantages (Manuela, Rhoades and Curtis 138-150).
It should focus on proper management of cost that would help the firm in earning higher
profit with the help of Hedging. The Hedging would further assist the firm to maintain the
flow of cash in a planned manner. The proper flow of money would help in the maintenance
of liquidity and the payment of bills. It would also help in reducing the expenses of fuel.
Adequate support for fuel cost would help to reduce its cost since expenses on fuel is one of
the essential components of the structure of the price. The firm must extend its presence in
the market of international commercial aviation. It must bring enhancement in its strategy
that would help the firm to achieve goals as well as objectives. It must focus on creating
partnerships with another competitive firm. It should formulate a basic plan that would help
the firm to survive in competition to achieve success based on the long term. In order word
expansion in the international market would help the firm to generate potential revenue
followed by having growth and development (Lawton). The possible disadvantages of the
company's structure are that it could create an issue for top management to maintain control
over the organization. To delegate responsibilities for making deciding for the organization is
a functional area which increased with coordination of activities. The company can
successfully expand, but there is a necessity of matrix structure to encounter complex
projects. The company should decentralize the structure of Southwest Airlines to develop in a
different geographic area, which allows them to entity independently. The company should
identify the new cities or routes to sell the product in local markets. Understanding the power
of collaboration will increase internal efficiency and could improve the decision-making
strategy (Gudmundsson). Another factor that affects the company is aggressive growth and

STUDENT NAME 5
Airfare. The prices are affordable for the customer, but the investors of the Southwest had the
major issue about this matter. For investing in the long-term, the company should track the
fundamentals of the industry and economic growth of the organization.

STUDENT NAME 6
Conclusion
Based on the above discussion, it can be concluded that several factors are related to
Southwest Airlines. The study has analyzed several factors which are associated with
environmental cultures which are affecting the industry in many ways. Along with that, the
current situation of the industry has also been elaborated in this context. The paper has
assessed the strategic, competitive position and the issues that have been faced by Southwest
Airlines. Based on the case study, the problems and the potential opportunities of the current
situation of the airline industry and Southwest Airlines have been identified. Those issues and
the opportunities have been addressed, and the necessary recommendations have been
identified in this study.

STUDENT NAME 7
References
Alamdari, Fariba, and Simon Fagan. "Impact Of The Adherence To The Original Low‐Cost
Model On The Profitability Of Low‐Cost Airlines." Transport Reviews 25.3 (2016):
377-392. Web. 2 Oct. 2019.
Basu, Susanto. "Are Price-Cost Markups Rising In The United States? A Discussion Of The
Evidence." Journal of Economic Perspectives 33.3 (2019): 3-22. Web. 2 Oct. 2019.
Cook, Gerald N. "Airline Operations And Management." (2017): n. pag. Web. 2 Oct. 2019.
Flouris, Triant G. "Designing And Executing Strategy In Aviation Management." (2016): n.
pag. Web. 2 Oct. 2019.
Gudmundsson, Sveinn Vidar. "Flying Too Close To The Sun." (2016): n. pag. Web. 2 Oct.
2019.
Lawton, Thomas C. "Cleared For Take-Off." (2017): n. pag. Web. 2 Oct. 2019.
Manuela, Wilfred S., Dawna L. Rhoades, and Tamilla Curtis. "The U.S. Airways Group: A
Post-Merger Analysis." Journal of Air Transport Management 56 (2016): 138-150.
Web. 2 Oct. 2019.
Scotti, Davide, Martin Dresner, and Gianmaria Martini. "Baggage Fees, Operational
Performance And Customer Satisfaction In The US Air Transport Industry." Journal
of Air Transport Management 55 (2016): 139-146. Web. 2 Oct. 2019.