BPL Case 3

Topics: Southwest Airlines, Herb Kelleher, Employment Pages: 2 (618 words) Published: November 30, 2014
1.) What do you see as the issues the company is facing?
Most travelers know Southwest Airlines as a more affordable choice compared to competitors. For years, this has been their competitive advantage. By keeping costs low, Southwest has been able to reduce their ticket prices while maintaining profitability. However, more currently, Southwest has not been employing their usual low-cost strategy and thus, has been losing market share. To match the profitability of competitors and offset some of the increased industry-wide costs, Southwest has been using a profit-boosting strategy. This means new fees to consumers, less leg room for customers on flights to allow for more seats per plane, and no more free baggage check-ins. Basically, they are trying to squeeze as much revenue out of each customer as possible, and are no longer considered by most to be a cheaper alternative to other airlines. Smaller seats and more fees are something travelers hate most about flying. Now, they aren’t even saving money by using Southwest Airlines. Thus, what is their competitive advantage presently? 2&3.) What alternative courses of action do you recommend the company pursue to respond to these concerns? What do you see as the consequences of the possible responses by the company to these concerns?

Instead of trying to nickel and dime their loyal customers, like most other airlines, Southwest could consider going back to doing what they do best. That is, maintaining the competitive advantage they once had and keeping costs low. Of course, times are a little different and Southwest can’t resist the industry-wide costs from rising, but they need to control the costs they can. For example, at one time, the culture at Southwest was fun and employees were willing to work there, despite accepting lower wages than what other airlines were offering. This helped to keep labor costs low, which is crucial, because the industry is labor-intensive. Once Southwest failed to maintain...
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