Southwest Case Analysis

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Southwest has made an organization out of providing low-fare, short haul routes between city pairs. It has concentrated specifically on offering low-fares on all of its flights by maintaining its no frills attitude and high frequency of flights. This has afforded Southwest Airlines with the lowest cost structure in the industry. Southwest has created a niche for itself by flying a network of flights between smaller U.S. cities that average just one hour apart. This has differentiated them from their competition and avoided many clashes with industry giants who concentrate more on coast-to-coast flights. Kelleher, who is the president, chairman and CEO of Southwest Airlines is the companies single biggest asset and driving force. Kelleher runs the company very tightly and makes all the major decisions through a very centralized decision making process. This brings to light two potential problems. Firstly, how can a company such as Southwest airlines maintain such a centralized organization in the face of growth. Secondly, how is this company going to survive once Kelleher is no longer running it.

The problem that Southwest Airline is facing, is how are they going to survive in an aggressive industry without Kelleher's leadership. It is a significant problem as the company is a symbol of Kelleher. However, unlike the company, Kelleher has a limited life-span and therefore the company will likely outlive him. This problem therefore requires some urgency as the succession of Kelleher could be the airlines biggest problem. The consequences of Kelleher leaving could be that the company loses its corporate identity. Employees may not respond well to new management. Customers may perceive that the company will not be run in the same manner and will therefore lose its niche market. This could also apply to stakeholders, who will see the departure of Kelleher as a serious decrease in the value of the company. Competitors may also try to take advantage of...
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