Southwest Airlines In 2014: Culture, Values & Operating Practices Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Problem Statement

The profitability of the company had been consistent since the inception of the company in the year 1973. Currently, the company has created a very strong position in the airline industry based on its strong competitive advantages. However, there are a range of problems that are being faced by the company and also there are many threats to which the company is exposed to.

Recently, international flights have been launched by Southwest Airlines and it is inexperienced in the international market. Language barriers and international customs and laws might also impact upon the logistics of the company. Further, there are many significant threats such as the increase in the oil prices, recession, and increase in the competition.

The profits of the company have always remained positive although, but the company has been experiencing a declining trend in its profitability. The objectives of the company are not able to address this problem. Finally, the main issue faced by the management of the company is to sustain its current performance and maintain its low cost operations, strong culture and employee driven performance.

Situation Analysis

It was in the year 2014, that Southwest Airlines had reached its consecutive 42nd year of profitability. Since the inception of the company in the year 1973, the company has been making profitability. The company was founded with a small investment in the air-taxi service by Rollin King. The company has differentiated itself till date with its low cost operation base and no frills strategy which is also maintained by the company till today.

Southwest Airlines is the first airline which was created with the objective of providing the lowest possible fares in the market to its wide base of customers. The complete fleet of the company is just comprised of the Boeings aircraft. The company had adopted a completely different strategic move and had remained at the Dallas Love Field which provided it with the power to become a monopoly at the Love Field Airport.

The company had sustained its strong hold over the financial front and maintained its outstanding performance which is evident by its $ 1.1 billion net income which has also broken the records of all the previous years. The share price of the company had increased by as much as 125% which is almost the double of the price in the year 2011, standing at $ 42.32 per share in 2014.

The main contributing factors to all of this rapid increase in the company’s performance was due to the successful integration of AirTran which was acquired by Southwest Airlines in the year 2011, the Wright Amendment repeal, and launch of the international service. Along with this other programs were also contributors in the dynamic performance of the company such as the fleet modernization program, Boing 737-800 model addition and Rapid Rewards program launch in the year 2010.

The financial position of the company in the year 2014 had strengthened and this had returned huge returns to the shareholders of the company. The operating revenues of the company stand at $18.6 million whereas the operating revenues of the company had increased by about 5.1%. This increase was observed because the jet fuel prices had declined along with the rentals and the maintenance costs of the jets. All of the above remarkable results were not possible without the efforts of the human resource of the company and it is their hard work which has differentiated Southwest Airlines completely as compared to its competitors.

Southwest Airlines In 2014 Culture, Values & Operating Practices Case Solution

Further, the owners of Southwest Airlines are looking to grow their B737 and capitalize over the numerous growth opportunities. 50 additional destination routes are being considered by the company with B737, from and to United States. The goals for the coming years have been also set by the company. First of all the company wants to maintain its profitability record that it has created since its inception. Furthermore, the company wants to enhance the traveling experience, customer service and grow the airline at the most sensible rate.

Competitive Advantage of Southwest Airlines

In order to create a competitive advantage and sustain that competitive advantage in the long term, the owners of Southwest Airlines have managed to create the competitive advantage of the company on the basis of four core components that are differentiation, future minded employees, employee driven performance and low cost operations. Southwest Airlines has focused on providing the low cost operations to its customers by having no frills service, no meals and this has helped the company to make profits even when all the other airlines are making losses specially after the 9/11 attacks by the terrorist...............

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