Southwest Case Analysis

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Retaining low cost structure is the root issue for Southwest Airlines. Southwest Airlines core competitive advantage was the ability to maintain lower costs in their operations. Lower costs of operations in the Southwest allowed them to offer lower fare prices, almost 50 percent lower than its major competitors. With the time changes it wasn’t very easy for Southwest Airlines to uphold this situation. Workers unions started to stand up and question about their wage increases. Fuel expenses are started to grow up every day. These factors directly affected the Southwest’s overall performances and its stock prices. Stock prices started to decline gradually. Still Southwest management tried to maintain their low cost strategy even when the company was growing rapidly and their external and internal factors stand-in against them. According to my analysis, Southwest management didn’t have a long term plan to maintain their low cost strategy. Herb Kelleher the chief executive officer of Southwest was able to maintain a very strong relationship with workers. But the new management didn’t able to maintain it. With the growth of Southwest Airlines it reached to 35,000 of workers and its culture stated to get change. As the company growing management didn’t able to keep track on their workers and their needs. That was a big fail for the company because the company and its workers used to maintain a great relationship between them for a very long time. Workers started to complain about staff shortage and their low wages. These incidents affect directly for the company’s overall performance. With the fast growth, Southwest Airline management couldn’t take the right actions to keep up with the growth. They expect workers to do more work than they usually do, which put them at risk of injury. Management should have hired more new workers as the company growing so the current

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