The Southwest Airline Company Case Study

I.) Points Of View: The Manager of Southwest Airlines Company.

II.) The Problem: The Company has a lower rate in terms of company developments and growths, which do affect also their rate in increase in profit.

III.) Objectives:

a.) To discover what causes the company’s low rate in growth and development.

b.) To come up with a good solution on how to increase the growth rate of their company.

IV.) Analysis:

	Strength	Weakness	Opportunities	Threats
a.) Manpower	1.) Dedicated and loyal employee. 2.) Competitive employees 3.) String and effective team player employees	1.) Employees are having rivalry sometimes.	1.) Southwest airlines are attracting more skillful and competitive employees because of their company’s culture.	1.) Other airline company might compete in having more competitive employees to compete to them as well.
b.) Money	1.) They are consistently generating profit for 24 consecutive years. 2.) Net income has grown 13.53 to 53.26% in 1997 and 1996 respectively.	1.) Income do not increase largely due to lack of expansion in other international markets.	1.) With their financial stability investors might go into ventures with them and they can expand their coverage of market like internationally.	1.) As they go into international market, they can also have more competitors that are already existing.
c.) Market	1.) Stable market. 2.) Gaining additional market share. 3.) Loyal Market.	1.) Limited target market.	1.) They can expand their market to other places because customers trust their service.	1.) Competitors are offering frills not like them. This may cause hard competition on their part.
d.) Materials	1.) The company embraces technology that will reduce their costs.	1.) No baggage handling and meals.	1.) Engaging to more hi-tech system like using internet may reduce their cost in ticket processing.	1.) Competitors are offering baggage handling, seat reservation on net and meals, which invites more customers.
e.) Machines	1.) All of their planes are Boeing 737, the maintenance, turnaround and training cost are contained.	1.) They only rely on one kind of aircraft and they haven’t tried if which is more reliable kind of planes.	1.) The new Boeing 737-700 can fly longer distance non-stop, so they can increase their number of flight with a very faster flight too.	1.) New alternative form of transportation like high-tech railways can weaken the demand of air traveling.
f.) Memo	1.) Employees understands the main goal at strategy due to proper information dissemination in every level.	1.) The company’s mission statement is weak.	1.) Employees are well trained and even implement programs to retrained employees.	1.) Competitors are also well trained and even set high standards and discharging all who does not passed the standards.
g.) Methods	1.) Company maintains 15-20% below standard of operation expense per set mile as a policy. 2.) Company is fun loving and employee oriented. 3.) Healthy internal competition.	1.) Rivalry on employee occurs sometimes.	1.) Having a minimal cost means higher profit gain and this can create a new capital for new market area.	1.) Competitors are avoidable in new other market area, which even offered frill to invite customers.

V.) Alternative course of course:

a.) Expand their market.

Advantages:

1.) Increase profit.

2.) Increase company growth and development.

3.) Earn more customer patriotism.

Disadvantages:

1.) Increase in operation cost.

2.) Have more employees to pay with their salaries.

3.) Security in the competition guaranteed to be favorable in their part.

b.) Improve their services rendered like consideration frills.

Advantages:

1.) Invite more customers

2.) Increase profit

3.) They can compete to other company who serves frills because their prices are still low.

Disadvantages:

1.) Increase operation cost.

2.) Increase in services means increased in member of employees and compensation.

3.) Increase in operation cost means increased in piece as well.

c.) Cut down operation cost.

Advantages:

1.) It can increase net profit.

2.) Cost strategy is developing.

3.) Expenses decrease as well.

Disadvantages:

1.) It will degrade the kind of service they offered.

2.) It may discourage customers.

3.) Low customer trust and patriotism.

VI.) Conclusion/ Recommendation:

Among the three courses of action that has been discussed, after evaluation them very well, we have come up with a decision to choose choices letter, which is the expansion of their market. It is because this alternative course of action can increase the rate of growth of development of their company. If the company would engage into new market, as we all know, many countries and cities are encouraging to fly with them with a great demand so this could render a security for them to operate their that they have the right number of customer who will acquire their service also. And besides, with the recognitions and good image in terms of customer’s relationship that they had received and established, customers will easily trust them. And one thing also, Southwest airlines offers low price and fast services which most customers are seeking, cheaper and most reliable service which most other company are having hard times in giving it. But as we all know, Southwest airlines is so cautious on matters about expansions because they’re practicing a steady, planned growth strategy so, the best thing that we can do here to give guarantees that customers would really buy they’re service is it improve more their services like rendering frills to improve their service rendered. This matter would invite more customers to patronize them because customers are also fun of being accommodated with frills. To avoid any circumstances like threatened be competitors, Southwest airlines should still consider lowering some of their operation cost as much as possible so that they can still give a lower price which is their advantage from the other companies in the new market (international and intercontinental).