Southwest Airlines

Posted: October 23rd, 2013

Southwest Airlines

1. Assess the effectiveness of Southwest Airlines’ leadership

The leadership of Southwest Airlines is based on servant leadership, accountability, and transparency. Colleen Barrett, one of the key leaders of the airlines, discusses in an interview how the management of this airline company seeks to achieve its goals, through service and not through imposition. Southwest Airlines, being known for its adverse recognition of human capital, ensures that the management and the workers work together on a horizontal relationship, such that all the employees of the company see each other as colleagues at the same level, whether management or regular staff. She also discusses in her interview, how a vertical approach where there is top-down leadership, brings a rift between the management and the workers of an organization, while at the same time facilitating undermining of human capital. Therefore, the management of this Airline has offered effective leadership to steer the organization to success in both returns and appreciation of human capital.

2. Discuss the basis of Southwest’s competitive advantage and potential challenges to its strategy

The basis of Southwest Airline’s competitive strategy is maximization and appreciation of human capital. In a documentary on the life of the airlines culture committee, they give their three pillars of the company: a warrior spirit, a servant’s heart, and a fun-filled attitude that are necessary for each employee to practice in their daily work life. The amount of energy directed into empowering the employees, right from the subordinate staff to the management, reflects outwards into the clientele and gives wholesome returns and high profits.

However, human capital has proved to be expensive not only to maintain, but also to develop. This explains the lay-offs in many organizations, which in effect, increase the stock-exchange rate of the different firms within a short period (Bhutoria, n.d). However, it takes exceptional management to draft a strategy that will ensure costs of running a company are reduced while productivity increases. Nevertheless, it is still important to maintain customer loyalty and ensure the workers are motivated, and there is room for creativity and growth in their line of work. The problems faced in the recent past, by the Southwest Airlines are because of the imbalance between human capital valuation, cost-cutting, and general productivity. If the management is able to balance the above factors, this will foresee success in the airline’s strategy of human valuation and appreciation.

Southwest airlines have also worked with the low-cost service delivery strategy since their inception. This strategy has worked effectively for the organization and has ensured constant profitability for the airlines. However, the effectiveness of this strategy began facing strict competition from other airline organizations that adopted the low-cost strategy. Companies such as JetBlue and AirTran reduced Southwest’s monopoly in low-cost service delivery and consequently infringing on the Airlines profit maximization. The airline either needs to redefine its low-cost strategy to accommodate increased competition in the market, or adjust their prices such that they remain fair, but do not pose a threat to the company’s profitability.

3. What growth strategies should Southwest pursue?

The first growth strategy Southwest Airlines should pursue is a pioneering strategy. The same way the company came up with the low-cost strategy that worked for them for many years, it should champion a new strategy that will further its innovations and its success. The company should also develop an adaptive strategy, which will be able to help them cope with the dynamics of the market place and the competition thereof (Spulber, 2007).

References

Bhutoria, N., (n.d). Valuation of Human Capital. HR Folks International: http://www.hrfolks.com/articles/intellectual%20capital/valuation%20of%20human%20capital.pdf

Spulber, D. F. (2007). Global competitive strategy. Cambridge: Cambridge University Press.