Strategy And Policy SWA

Essay by PaperNerd ContributorUniversity, Master's March 2001

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THE STRATEGY Southwest Airlines began with a vision. Herb Kelleher looked at the airline industry, saw an opportunity, and made a move. The idea was simple: "short-haul, point-to-point flights; a fleet consisting only of Boeing 737's; high-frequency flights; low fares; and no international flights." All this was to be offered in a market traditionally characterized by steep prices, set to compensate for high variable costs as well as high fixed operating costs. Furthermore, they would compliment their cost strategy with the best customer service in the industry.

With a well-trained staff, a few planes, and key locations near Texan urban centers Southwest Airlines put their foot in the industry. Founded on the basis of the "Southwest Spirit," the internal structure of the organization was incredible, and the corporate culture filtered directly out to the customers. Southwest defined itself as a corporation based on an innovative idea, a loyal workforce, and continuing improvement.

The focus and consistency of this mission has been the cornerstone of Southwest's success right up to the present. Such enormous success, in fact, that rapid growth was an inevitability. The question is: How do they control their growth while remaining consistent with their initial strategy.

EXPANSION One of the most important qualities that Southwest has possessed can be phrased "Know Thyself." When the times came for expansion, Kelleher always stressed the need to keep it under control and stay consistent with the company focus. Southwest had to take into serious consideration the affects it would have on their promise of timeliness and efficiency. He wisely took into account the threat it might pose of compromising their initial strategy for added revenue. As it turns out, the Southwest image has been maintained so far, but what about the future? With demand increasing at such an accelerating rate, a...