What is Southwest’s strategy?

What is the basis on which Southwest builds its

competitive advantage?

Ans-southwest using mixed strategy both differentiation as well as cost leadership. The company has
used many approaches to its operation and management , which led them to being able to offer
service differently as well as lower rate. For instance, southwest prefer to use less congested airports
has no assigned seats , pay its crew by trip and employs good system of online ticket sales. The CEO
herb Kelleher highlights the firm philosophy of putting employees first stating that have happy
employees leads to happy customers which leads to happy shareholders. In 2003 they saved about
$455 million hedging their fuel and oil needs and passed on the savings to there customers. They
also reduced there turnaround time to less than 25 minutes which leads to flights spending more
time in air and less time on the ground which lead to higher revenue less cost.

How do Southwest’s control systems help execute the firm’s strategy?

Ans -First is the cutting down of costs. They are applying the short-distance flights which makes 80%
of its passengers flew non-stop. They have no assigned seats, paid its crews by trip and used less
congested airports. They also have this control over the purchase of fuel wherein 85% of its fuel and
oil were hedged which resulted to savings of $455 million. Efficiencies made my Southwest resulted
to lower costs which are passed on to its passengers. This will lead to my second point which is,
offering customer satisfaction. Many would want to fly with Southwest because it is cheaper, lesser
hours of travel and at the same time easier to book a flight. Southwest have this desktop application
called “Ding!” that provides exclusive deals. They also have online bookings via southwest.com
where they generated 60% of their passenger revenue. This also helped to reduce their employees
and save costs.