2. Southwest Airlines: How much can ‘LUV’ do?
Naga Lakshmi Damaraju
Gregory G. Dess
Alan B. Eisner
Vasudev Krishnan
McGraw-Hill/Irwin
Strategic Management, 3/e
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3. Southwest Airlines
Assess the leadership effectiveness at Southwest Airlines.
McGraw-Hill/Irwin
Strategic Management, 3/e
Copyright © The McGraw-Hill Companies, Inc. All rights reserved.

4. Southwest Airlines
Discuss the various components of Southwest’s strategic control systems.
McGraw-Hill/Irwin
Strategic Management, 3/e
Copyright © The McGraw-Hill Companies, Inc. All rights reserved.

5. Discuss Southwest’s approach to managing human capital.
Southwest Airlines
Discuss Southwest’s approach to managing human capital.
McGraw-Hill/Irwin
Strategic Management, 3/e
Copyright © The McGraw-Hill Companies, Inc. All rights reserved.

6. Southwest Airlines
Discuss the basis of Southwest’s competitive advantage and the potential challenges to its strategy.
McGraw-Hill/Irwin
Strategic Management, 3/e
Copyright © The McGraw-Hill Companies, Inc. All rights reserved.

7. Q1. Leadership Effectiveness
Setting Direction: Low-cost airline providing point-to-point services. Leadership ensured that the organization did not digress from this core business and kept focus on profitability.
Organizational Design: Open communica-tion, culture that was not bureaucratic; tight cost controls; employee participation at all levels; sense of ownership among employees
Nurturing a Culture Dedicated to Excellence: “Excellent customer service” – key goal; employees come first; Kelleher’s personality; proactive approach to leadership transition
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Strategic Management, 3/e
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8. Q2. Strategic Control Systems
Informational Control
Doing the “right things”
Focus on low-cost strategy
Conservative expansion
Profitability prime focus, not growth
Behavioral Control
Doing “things right”
Survival crises forged the ‘Southwest spirit’
Openness, communication, fun, and celebration
“Star of the Month”
Signed birthday cards
‘No furlough’ policy
No elaborate rules and regulations
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Strategic Management, 3/e
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9. Q3. Managing Human Capital
Mission statement makes a commitment to employees
Recruitment policy is “hire for attitudes, and train for skills”
Fun culture, reward systems, and ‘no furlough’ policy help in retention
Nurturing of ‘social ties’ or social capital
Emphasis on team work
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Strategic Management, 3/e
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10. Q3. Managing Human Capital
Strategy is “overall cost leadership”
Structure and systems aligned with strategy
Activity system – the tight linkage across its value chain activities that is valuable, rare, inimitable, and non-substitutable
Sustainability
JetBlue – Southwest needs to achieve parity on differentiation (‘in-flight entertainment’ system)
The need to balance ‘low-cost’ and ‘differentiation’
McGraw-Hill/Irwin
Strategic Management, 3/e
Copyright © The McGraw-Hill Companies, Inc. All rights reserved.