Case Analysis

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USC Marshall School of Business
GSBA 520: Business Fundamentals for Non-Business Majors
Professor: Thomas. H. Olson
Master of Public Administration
Zhijun, Gao
Case Analysis-Southwest Airlines
1. Use the Star Model to describe the strategy, etc., of Southwest. Prepare a diagnosis of Southwest. Southwest Airlines is an American airline based in Dallas, Texas, and it is the largest airline in the United States. Since the airline is originated from a small company, but it has won against many large and experienced competitors, so the incredible accomplishment achieved by the company has many reasons. Here we apply the Star Model to describe the reasons for Southwest Airlines’ success. The Star Model is an analytical tool for the purpose of evaluating the performance of an organization; it depicts the key features of an organization: strategy, structure, rewards, processes, and people. Here we apply this model to the case of Southwest Airlines. Strategy

In the Star Model, business strategy is the foundation element. It defines the kind of organizational performance that is needed, the types of organizational capabilities and competencies that are needed, and how the organization forms its competitive edge in the industry. The most important thing is that the strategy the company selected should be suitable with its resources and capabilities, thus shaping its edge. 1. Customer service and low price

In the Southwest Airlines’ case, since the company was relatively small and lack of capital, so it cannot compete with other large airlines through huge investment and technology. But King and his associates firmly believed that there is a need existed for improved air service between Houston, Dallas-Fort Worth, and San Antonio, and although Braniff and TI provided most of the air service between these markets, the degree of customer satisfaction of their service was very low, and Braniff was even commented as “the World’s Largest Unscheduled Airline”, the founder of Southwest saw the opportunity to win against them. Therefore, the company placed great emphasis on customer service; it operated many flights day and night to make sure that the customers’ need can be satisfied. The service of hostess and other staff was superior to the other two companies. Besides high quality service, the low price strategy also contributed to the company’s success, its $20 flight tickets, much lower than $27 of its competitors, and the following “60-Day-Half-Price-Sale” plan greatly increased the company’s revenue and market share. 2. Emphasis on effective marketing

As a newly established company, in order to gain reputation in the market, Southwest Airlines not only provide best customer services and low price, but place great emphasis on marketing and publicity as well. The company launched several marketing campaigns with attractive slogans to raise its reputation, which had gained much favor from the customers. Structure

The second point on the Star Model is the organization’s structure, which refers to how people are grouped together, who reports to whom, how tasks are assigned, and the nature of the jobs within the organization. In the Southwest Airlines case, the organization chart is presented below:

From the chart, we can see that the structure is very flat, not bureaucratic at all. And it clearly depicts each department’s power and responsibilities, as well as stipulating who reports to whom. This relatively lateral and clearly defined structure was helpful in improving the efficiency of organization. From the case, we can find that the decision making in Southwest is very quick, which saving a lot of time, the reason behind is the rational organization’s structure. Process

The management processes are the systems that the organization puts into place to help control, manage, inform, and direct its members’ behavior. They include information and communication systems, budgeting and financial measurement systems,...
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