Southwest Airlines

Question a

According to Michael Porter 's framework for strategy formulation , a business organization has three strategies at its disposal differentiation , cost minimization and focus . According to the case study , Southwest Airlines was implementing the strategy of cost minimization . This was the critical success factor in the company 's operations . However this was a difficult strategy to implement in the airline industry because operating in this industry meant a high level of fixed costs . The only true variable costs were travel agency commissions , food costs and ticketing fees . In to minimize

the variable costs , other airlines implemented sophisticated software tools which facilitated yield management

The costs associated with yield management were non-existent at Southwest Airlines because unlike other airlines it had only a single fare structure . This minimized the cost of operations . Another unique thing about the operations at Southwest was that it provided point-to-point service . Other airlines provided the hub-and-spoke system . The point-to-point service enabled the company to reduce its cost of operations by creating an infrastructure in which the planes were required to spend less time on the ground (cited in Hitt , 2007 These were the factors that contributed to Southwest 's success . As a result of these unique strategies , the company was able to maintain its profitability even during the economic chaos that followed the terrorist acts on September 11 . The company managed in the good times so that it could do well in the bad times

Question b

Southwest Airlines ' two most important assets were...