STRATEGY MBL 915P
Southwest Airlines in 2008: Culture, Values and Operating Practices
Repeater Assignment 2
By : Refiloe Mokebe (72542683)
Table of Contents
Question 1 – What is impressive about South West? 3
Question 2 – Benchmarking against the best practices 4
Question 3 – Key drivers for low cost / no frills strategy 6
Question 4 - What are the key elements of Southwest’s culture? 9
Question 5 - What grade would you give Southwest management? 13
Question 6 - What problems or weaknesses do you see at Southwest Airlines? 15
Question 7 - What recommendations would you make to Gary Kelly? 16
List of References 17
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They have proved that they are a major competitive force in the US airline industry over years, through their lowest operating cost structure and consistency in offering the lowest and simplest fares (Thompson et al. 2010: C401).
Question 1 – What is impressive about South West?
Is there anything that you find particularly impressive about Southwest Airlines?
Most businesses tend to build their companies on a dynamic strategy which through its changing nature, tends to erode from their founding strategy. Southwest maintained its existence through aligning its success to its founding strategy of low cost/ low fare airline which remains present and key after 40 years of existence, and their philosophy was and still is to do whatever they have to do to get the job done. Southwest fought to be in existence and remains in existence through maintaining its founding strategy.
The value they have for their employees driven by Southwest’s thesis of keeping employees happy – then they will keep customers happy, is beyond contention of most companies as the best a company can achieve in any business. The low employee turnover rate and large numbers of applicants is a strong indication of how real they value their employees. Another interesting fact about Southwest Airlines is the fact that in its 40 year existence, there have only been four CEO’s and twenty years of which were under the leadership of Herb Kelleher.
Question 2 – Benchmarking against the best practices
What grade would you give Southwest management for the job it has done in crafting the company’s strategy? What is it that you like or dislike about the strategy? Do they have a winning strategy?
Thompson et al. (2010: 362) defines benchmarking as the backbone of the process of identifying, studying and implementing outstanding practices, and further states that, a company’s benchmarking effort looks outward to find the best practices and then proceeds to develop the data for measuring how well a company’s own performance of an activity stacks up against the best practice standard.
The pay-off of benchmarking comes from adapting the top notch approaches pioneered by other companies. Companies that benchmark with best practices implementation normally come out with high operating excellence and this can be achieved by:
• Participating in benchmarking to identify the best practice for performing an activity
• Adapting the best practice to fit the company’s situation, then implementing it
• Continued benchmarking of companies performance of the activity against best in industry or the world
• Moving closer to operation excellence in performing the activity
The task of crafting a strategy entails addressing a series of how’s (Thompson et al. 2010: 362);
• How to grow the business
• How to please customers
• How to outcompete rivals
• How to respond to changing market conditions
• How to manage each functional piece of the business
• How to develop needed competencies and...