Southwest Airlines Case Study Essay
Southwest was founded by Rollin King and Herb Kelleher in Dallas in 1966. The business core is to provide low-fare and short-haul flight service to their customers through low cost operation. By consistently focusing on this core strategy, Southwest has grown to become one of the largest airlines in the United States, competing with other carriers including the Big Three – Delta, United and American Airlines.
Based on my analysis of the case, I have discovered that one of the biggest problems facing Southwest is the dilemma whether they should maintain their focus on short-haul flight or they should alter their strategy for more profit opportunities. …show more content…
Besides their actions, I also have some recommendations which I believe will help them to solve the problems. First, Southwest should continue to expand their international market. As domestic markets near the ceiling, more growth and profit opportunities exist abroad. For instance, China is a market full of potential. As more and more Americans want to visit China and more Chinese plan to come to the U.S. for different purposes, the demand for more airline options is increasing. Right now, only Delta, United and American Airlines have opened routes to China. If Southwest expands their routes, they are able to grab some market share from the Big Three because of the cost leadership strategy they are employing. Second, in terms of cost reduction, Southwest can try to decrease other operational expenses. For example, because Southwest utilizes their planes much more frequently than other carriers, their cost of plane maintenance is huge. One way Southwest can do to reduce this cost is to outsource maintenance service from external suppliers with low cost and high quality. By outsourcing, Southwest can save part of their maintenance budget and expand their cost