Professional Documents
Culture Documents
SouthwestCase
SouthwestCase
2-0012
Southwest Airlines
no. 2-0012
Joan Magretta, What Management Is: How It Works and Why Its Everyones Business (The Free
Press, 2002), 199.
Tuck School of Business at Dartmouth William F. Achtmeyer Center for Global Leadership
Southwest Airlines
no. 2-0012
candidates during the interview process. Southwest hired for attitude as much as
aptitude. Noted CEO Kelleher, We want people who do things well, with laughter
and grace.2
Southwest initiated the first profit-sharing plan in the U.S. airline industry in 1974
and offered profit sharing to its employees every year since then. Through this plan,
employees owned about 10 percent of the company stock. In 2000, Southwest offered
its employees a record-setting $138Mm in profit sharing. This tax-deferred
compensation represented an additional 14.1 percent of each employees annual
salary.
Discussion Questions
1. What is Southwests strategy? What is the basis on which Southwest builds its
competitive advantage?
2. How do Southwests control systems help execute the firms strategy?
Kevin Freiberg and Jackie Freiberg, NUTS! Southwest Airlines Crazy Recipe for Business and Personal
Success, (Bard Press, Inc., 1996), 65.
Tuck School of Business at Dartmouth William F. Achtmeyer Center for Global Leadership
Southwest Airlines
no. 2-0012
Delta
19.5
6.5
15.2
Continental
38.1
11.2
8.8
2000 Data
18.1
16.7
Sales ($B)
5.6
19.3
As percentage of sales:
Cost of goods sold
Gross margin
Operating income
Net income
76
24
23.7
10.7
91
9
9.0
0.3
87
13
12.8
4.3
83
18
17.5
4.9
89
11
11.0
3.5
18
12
12
17
30
Tuck School of Business at Dartmouth William F. Achtmeyer Center for Global Leadership
9.9