Southwest Airlines Case

Southwest has been a pioneer of strategic and tactical advantages for the airline community since first taking flight in 1971. From maintaining a very strong internal environment with profit sharing, and the “no laying off policy” for employees to their commitment to customer satisfaction with a multi-million dollar corporate culture committee and constantly improved ticket purchase/check-in procedures to ensure customer satisfaction, Southwest understands that keeping their employees and customers happy will keep their cash flows positive.

Southwest is not only keeping their cash flows positive, but they are exponentially taking advantage of their profits by hedging fuel costs and maintaining a low debt to equity ratio. I believe this to be a unique strategy and a competency hard to duplicate by other airlines and therefor an essential capability to keep intact while determining a strategy to expand internationally.

Maintaining one model airplane is another advantage that Southwest needs to maintain while expanding internationally. The low amount of maintenance costs, manuals, tools, spares, fleet management/training advantages is another core competence in my opinion that allows this Billion dollar airline to maintain a significant advantage over other airlines. The Coast Guard spent the better part of the last decade standardizing cutters and still has yet to accomplish standardization to more than 20% of their fleet. The cost benefits are substantial and as mentioned, hard to duplicate, making this another core competency to maintain.

Finally, I would expand internationally as mentioned in SW’s expansion plans. I would first ensure the above core competencies remained intact and possibly quickly address their “herding of cattle” boarding process, but overall, I think they will find a carefully planned international expansion will be a positive contributor to an even greater cash flow.

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