Southwest Airlines Sustainable Competitive Advantage

Ahmani Nkwodimmah Training and Development – Fall 2016 Wilmington University How has the company’s business strategy affected the training it provides to employees? At Southwest Airlines, the company’s business strategy has a positive effect on the training they provide to their employees. Southwest Airlines is a Texas based airline that started up in 1971 (Corporate Fact Sheet). Over the years the airline has been recognized for its outstanding customer service and its low airfare fees. Due to their excellent customer service, the company has been ranked number one in customer satisfaction in 2013 by the U.S Department of Transportation. In. 2015, Southwest airlines was recognized as one of the Best Places to Work in the Glassdoor Employees’ Choice Award. The reason that Southwest airlines is recognized for all these great things is because they obtain a good organizational control over the airline.

Introduction Southwest Airlines is a major US airline established in 1967 that services a multitude of cities in all 50 states and beyond. The company is known for its outstanding quality in providing services and it 's cost effective ticket prices to its many passengers throughout the nation. This airline is based in the southwestern United States, in the city of Dallas Texas, and due to the tremendous number of airplanes that it has and the timely service that it provides to its passengers, this airline services more US passengers than any other airline. This airline also has the largest fleet of planes of any economical or low-cost airline service in the world and employees more than 45,000.

Southwest has an average turnaround time of 25 minutes. This is quite lower than the industry average. For this success, the factors that were responsible were; an absence of meals on all Southwest flights, a limited amount of checked luggage on Southwest’s typically 60- to 90- minutes flights, a near-uniform configuration for all of its 737 aircraft, a team-oriented approach to ground services with team measures for turning around planes and freedom to do whatever necessary to get a plane pushed off on time with a high speed boarding process.

Based on the case study, and on online and offline research into Southwest Airline’s current state, complete the following Tasks:

Southwest Airlines Intellectual Assets Introduction Southwest Airlines Company (Southwest Airlines or ‘the Company’ SWA) is a passenger airline that provides scheduled passenger and freight transportation services. The Company primarily provides scheduled services throughout the US and near-international markets. It is headquartered in Dallas, Texas and employs 48,000 people and serves over one hundred million customers annually (“Southwest,” 2015). Southwest Airlines has accumulated over forty years of revenue and is one of the supremely flown airlines in the United States of America (Dess, et al, 2014, p. C137). Recognized for dominating the national or domestic airline market, Southwest Airlines’ diligence has built an

People – One of the many things good about Southwest Airlines is that the kinds of people who are heroes of the organization are people who care and go out of their way to help the customers. They’re the ones who are celebrated and held up as shining examples. Additionally, high levels of satisfaction among employees can be attributed to Southwest employee policy. Happy employees can provide high quality service and bring more customers back. To reinforce the culture of hard work, high-energy, fun, local autonomy, and creativity, the company provided continuous education program to employees. If you can help someone out or brighten someone’s day, be it a co-worker or a passenger, you’re doing your job well.

Southwest Airline was from an idea on a napkin between Rollin King and Herb Kelleher. Eventually, after a few regulation issues, the airline became official on focusing point-to-point travel between Dallas, Houston, San Antonio. One of the early key success factors which stated in the case, “ In contrast to larger airlines servicing the cities through connecting interstate routes, Southwest would fly directly to each of the cities, and the flights would take roughly one hour each.” Not only Southwest has the advantage of time but also the trust on safety from frequent flyers by having a direct flight to each city. Likewise, within two years (1971-1973) due to price segmentation based on the time of before and after 7 PM along with weekends, the company became profitable.

Operational Overview Southwest Airlines is a passenger airline company that arranges and provides scheduled flights for passenger and transportation freight services. The company mainly provides, low-fare, point-to-point services all over the US and near-international markets. The headquarters is located in Dallas, Texas and as of December 2014, the company employed

hrmn 400 | ASSIGNMENT 4 FINAL ASSESSMENT | Southwest Airlines Case Study | | Temony McNeil | 3/9/2014 | | Introduction Southwest Airlines is a very aggressive company striving to increase its competitive advantage in the market without compromising the core values that have been set to differentiate itself from its competitors. It’s only by keeping the values of working hard, having fun, and treating everyone with respect that Southwest Airlines and its affiliates will continue to be an award winning organization. Southwest Airlines has been known to create a synergy between the multitude of personalities and behaviors which make up its workforce. Southwest has benefited from its successes by being able to acquire other

Competitive advantage is that a company has better ability in earning profit and profit growth compared to its competitors for the same group of customers in one industry.

Southwest Airline employees mainly belong to the Union and they are mainly full time workers. Since the Union has demand more services and benefits for their members, the company gain limited profit. To fix this the company should hire more part time workers instead of full time workers because they do not have to provide full benefits and instead focusing on gaining profit. And also, Southwest Airlines should make all flights within the states point-to-point flights, and give their employees a strict time lines to alleviate delays. This will keep an accurate time frame for customers. As far as the flight concerns, Southwest Airline has only one dependable

COMPETITIVE ADVANTAGE Definition A company is said have In order to achieve competitive advantage, a firm must perform one or more value-creating activity that is more superior compared to other competitors. Superior value is created through lower costs or superior benefits to the buyers.

Part A Southwest Airlines Co. is an airline company that offers air transportation services within the United States and in international markets. The company operates within the airline industry that is highly regulated, technology intensive, labor intensive, and highly competitive (Southwest Airlines, 2017). Southwest Airlines operates a service business whereby the company offers a point to point air transport service to its passengers. Other than passenger transport, the company offers transportation services for pets and unaccompanied minors. The flights offered include short haul and long haul between various destinations within the United States and internationally. In 2016, the company’s operating revenues from international operations amounted to $383 million. A unique feature of the Southwest Airlines is its cost structure whereby the company focuses on cost discipline and uses one aircraft type to minimize costs.

EXECUTIVE SUMMARY Southwest Airlines provides short haul, high frequency, point-to-point, low-fare services to and from 58 cities across the United States. The company is known for its low-cost fares and superior customer service in the airline industry. The company was started in 1971 with a motto still lived by today, "If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline." This motto has been effective for the company because they recently reported their 58th straight quarterly profit.

Competitive advantage is explained by Mahoney and Pandian (1992) as the function of industry analysis, organizational governance and the firm’s effects in the form of resource advantages and strategies. In order for a firm to be competitive it must adapt to the volatile business environment and through strategic management decisions establish a competitive advantage that will ultimately produce superior performance relative to its competitors (Akimova 2000).