Case 3-1: Southwest Airlines Corporation
What is Southwest’s strategy? What is the basis on which Southwest builds its competitive advantage? Cost cutting SWAC uses a low-cost strategy. They had the lowest operating-cost structure in the domestic airline industry. Employee satisfaction Together with this strategy, they want to achieve customer satisfaction by employee satisfaction. They are famous for their customer and employee relationship. SWAC has been recognized by multiple organizations and magazines as the most admired airline corporation in the world. By making their employees happy, customers are served well.
The core competence for this competitive advantage is their hiring process. Peers screened candidates and conducted interviews; pilots hired pilots; gate agents hired gate agents. They searched for the unique strengths in their top performing personnel and based on that they set profiles to identify the to
...p candidates. How do Southwest’s control systems help to execute the firm’s strategy? Cost cutting They have no assigned seats, crew is paid by trip and airports are less congested. SWAC uses an online booking strategy and automation services and desktop applications to establish their goal of cost cutting.
As one of their rules, Southwest’s pilots are not part of a National union, meaning they are not bounded in flying hours. In order to aim lower fares, Southwest generates on increased passenger traffic by approaching short haul, medium haul and point-to-point flights. In comparison with their competition, Southwest had less idle time, faster operation time and less headcount. Employee satisfaction In order to execute the firm’s strategy, Southwest’s employees gained high loyalty in the company’s leadership and through regular interviewing the department’s head courts, the company was able to control and regulate by
collecting data.
SWAC is clearly present in the people business. Therefore it’s important to both satisfy your employees as your customers. SWAC has a low employee turnover due to its employee satisfaction strategy. To establish the employee satisfaction, SWAC uses special promotion bonuses and award redemptions. They achieve a great customer service by employee satisfaction. If customers are satisfied, they will come back, what will make the shareholders happy and create shareholder value. They also set up a profit-sharing plan by which the employees owned about 10 percent of the company stock.
The company has a culture of hard work, high-energy, fun, local autonomy. Crew activities were reinforced by trainings at its University of People, in-flight contests and recognition of personal initiative. All these measures establish goal-congruence within the company. Every single person within Southwest Airlines knows what the goal is. They have their own culture, a set of attitudes where everyone within the corporation feels himself comfortable with. A set of common beliefs, shared values and norms of behavior. These sets function in a way as some kind of control.
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