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 Organization History and Life Cycle  External Environment  Mission, Goals, and Strategies  Organizational Culture and Management  Interorganizational Relationships

 “ As company legend goes, the very first route map was drawn on a cocktail napkin during a meeting between Rollin King and Herb Kelleher.” 1967: Air Southwest Co. is incorporated; later in 1971 the company name was changed to Southwest Airlines Co. Rollin King and Herb Kelleher founded Southwest Airlines with one simple goal: To serve Dallas, Houston, and San Antonio with point-to-point flights.

Herb Kelleher, Attorney at Law (Co-founder)  1967: Files application with TAC to serve DAL, IAH, & SAT.  Rival companies Braniff and Texas International serve the same areas; hence, they fought through the legal system to keep Air Southwest grounded.  Herb offers to represent Air Southwest’s appeal to the Texas Supreme Court. He charged no fees and paid any costs out of pocket.  1970: Texas Supreme Court overturns lowers court ruling and clears Air Southwest for “take-off.” ‹#›

Lamar Muse: Joins Air Southwest in 1971 as President.  Seasoned and proven leader in the airline industry with many connections  Sells promissory notes to raise $1.25M in funds for aircraft and startup costs  Makes agreement with Boeing to purchase three Boeing 737s (with Boeing holding 90% of the financing)  Hires “The Over the Hill Gang” (Dick Elliot, Jack Vidal, Donald Ogden, Bill Franklin)  Made initial public offering of stock (raising $6.5M in funds)  June 18, 1970: The “Love Airline” is born; starting service to DAL, IAH, & SAT.

1975: LUV made ticker symbol on American Stock Exchange 1976: Southwest Airlines expands service to 5 new cities in one year. 1978: Deregulation of the airline industry caused a surge of passengers, which contributed to Southwest’s growth. 1978: Southwest Airlines purchases Midway Airline as a wholly owned subsidiary and enters the Northeast U.S. market 1978: Muse resigns as President; Herb is asked to step in as Interim President, CEO, & COB. 1981: Herb Kelleher assumes the permanent position of President and CEO

‹#›  Herb Kelleher served Southwest Airlines from  1989: Southwest proved major competitor as it exceeded the billion dollar revenue mark  Profitable for 37 years  Largest U.S. based airline (by passengers)  547 Aircraft (Boeing 737)  3400 Flights A Day

‹#›  One of first airlines to have a website  First airline to offer automated ticket services  “Southwest Effect”- term coined by the Department of Transportation  After 9/11/01 Southwest Airlines was the only U.S. based carrier that did not lay off any employees

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Simple + Stable Low Uncertainty Complex + Stable Low Moderate Uncertainty 1.Small number of external elements, and elements are similar. 2.Elements remain the same or change slowly. 1.Large number of external elements, and elements are dissimilar. 2.Elements remain the same or change slowly. Simple + Unstable High-Moderate Uncertainty Complex + Unstable High Uncertainty 1.Small number of external elements, and elements are similar. 2.Elements change frequently and unpredictably. 1.Large number of external elements, and elements are dissimilar. 2.Elements change frequently and unpredictably. Uncertainty

 Competition  Fuel Prices  Air traffic disasters  Customer demands  Economic downfall  Government Regulations ‹#› Complex + Unstable High Uncertainty 1.Large number of external elements, and elements are dissimilar. 2.Elements change frequently and unpredictably.

External SWOT Analysis OpportunitiesThreats New Technologies increasing efficiency Bargaining power with Boeing Decline in fuel prices Acquisition of AirTran Receptive business travelers Increasing fuel prices Increased airport security Weather Third-Party agents Substitute products in short- haul markets Intense competition ‹#›

Porter’s 5 Forces  Threat of New Entrants (L) Capital Intense Government Regulations Excess to distribution channels Loyalty  Power of Buyers (H) Switching cost Differentiation of products Information available ‹#›

Porter’s 5 Forces Cont.  Power of Suppliers(H) Switching costs Good for Company’s success  Threat of Substitutes(M) Rental Car Services Rail Bus Ship ‹#›

Porter’s 5 Forces Cont.  Rivalry of Existing Firms (H) Slow growth Mergers Competition ‹#›

— The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and Company spirit. — To Employees: — We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer ‹#›

— Low cost leadership — High customer service ‹#›

 Low cost Leadership ‹#›

—Chart on pg 73 — ess/21south.htmlhttp:// ess/21south.html — /southwest-airlines-agrees-to-buy- airtran-for-1-4-billion-in-cash-shares.htmlhttp:// /southwest-airlines-agrees-to-buy- airtran-for-1-4-billion-in-cash-shares.html  Defender strategy ‹#›

— Internal process approach

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Resource Dependence Population Ecology Collaboration NetworkInstitutionalism Organization Relationships Organization Type Cooperative Competitive DissimilarSimilar

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