Southwest Airlines
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From its humble roots, Southwest Airlines has emerged as a major airline in the U.S. In an industry where failure is more common than success, the company has achieved steady growth and an impressive performance record. With no reprieve from intense competitive pressure in sight, Southwest needs to determine if its technological innovations, procedural improvements, managed price hikes, and acquisition activity are sufficient to overcome looming challenges in the industry.
1. What are the key industry conditions which render profits elusive for airlines?
2. Does Southwest Airlines have a durable competitive advantage?
3. Do recent issues (such as safety violations and a labor union dispute) signal inherent weaknesses at Southwest or demonstrate the company's strength at handling threatening situations as they emerge?
4. How can Southwest achieve long-term strategic competitiveness against its rivals?
5. What strategy (or strategies) should the company use to continue its growth?
6. Is Gary Kelly the right person to head up Southwest Airlines at this time?
Chinese firms continue to develop resources and capabilities that allow them to create value for their customers and earn above-average returns. look at the benefits that influence firms to use international strategies and identify which ones are prompting companies (from different countries) to engage in global business. Discuss why so many firms use a strategic alliance when operating internationally. Do you think this situation is likely to change in the future? Why or why not?
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Solution Summary
From its humble roots, Southwest Airlines has emerged as a major airline in the U.S. In an industry where failure is more common than success, the company has achieved steady growth and an impressive performance record. With no reprieve from intense competitive pressure in sight, Southwest needs to determine if its technological innovations, procedural improvements, managed price hikes, and acquisition activity are sufficient to overcome looming challenges in the industry.
1. What are the key industry conditions which render profits elusive for airlines?
2. Does Southwest Airlines have a durable competitive advantage?
3. Do recent issues (such as safety violations and a labor union dispute) signal inherent weaknesses at Southwest or demonstrate the company's strength at handling threatening situations as they emerge?
4. How can Southwest achieve long-term strategic competitiveness against its rivals?
5. What strategy (or strategies) should the company use to continue its growth?
6. Is Gary Kelly the right person to head up Southwest Airlines at this time?
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1. What are the key industry conditions which render profits elusive for airlines?
The key industry conditions that makes profits elusive for airlines including rising input costs, especially those related to fuel costs which puts a major dent in the profitability of the company, recessionary market conditions which reduces load factor and forces airlines to operate at less than full capacity during tough business conditions and rising competition which has forced airlines to work on very low fares and margins to survive in the industry.
2. Does Southwest Airlines have a durable competitive advantage?
I think that Southwest Airlines does have a durable and sustainable competitive advantage because the company's overall strategy of being a low cost airline is strongly supported by its functional and operational tactics. The superior management strategy, loyal employee base and strategies such as short haul, point to point routes and focus on less crowded airports and high operational efficiency results in sustainable advantage which is difficult to replicate by other players. The company offers strong value of money to its customers via low fares and highly reliable and quality service.
3. Do recent issues (such as safety violations and a labor union dispute) signal inherent weaknesses at Southwest or demonstrate the company's strength at handling threatening situations as they emerge?
The recent issues related to safety violations and labor union dispute does not ...
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- MBA, Rochester Institute of Technology
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