Question

What grade would you give Southwest management for the job it has done in implementing and executing the company’s strategy? Which of Southwest’s strategy execution approaches and operating practices do you believe have been most crucial in accounting for the success that Southwest has enjoyed in executing its strategy? Are the any policies, procedures, and operating approaches at Southwest that you disapprove of or that are not working well?

Answer 1

According to the book Essentials of Strategic Management (chapter 10) a successful strategy must have 8 components:

In my opinion, SWA is successful in most of the eight points:

SWA is mainly characterized on recruiting the best and bights people they can find and then retain them with excellent compensation packages, opportunities for rapid advancement and professional growth, and challenging and interesting assignments  .

The success of SWA was to tackle those activities that were critical in its low-cost strategy. The company only operates one type of aircraft, was the first company to introduce ticketless travel or point-to-point scheduling of flights. These are just few examples on how research and marketing departments put their entire effort on finding ways to reduce cost in every step of the service offered.

Also the TQM approach is very good implement due to the empowerment of employees at all levels: “empowering people to take decisions will make a positive difference every day”  and the improvement of total customer service and satisfaction by hiring personnel who enjoyed interacting with customers and developing marketing tools as frequent-flyer program and rapid reward based on trips flown rather than mileage.

SWA has a really strong corporate culture fostered by its executive management level. In SWA managers are expected to spend at least one-third of their time out of the office, walking around the facilities under their supervision, observing firsthand what is going on, listening to employees, and being responsive to their concerns. Also company executives are very approachable and in 1990 formed a Culture Committee. All this things also help to pursue the goal of customer satisfaction.

SWA also believed in training and promotions. Approximately 80-90% of SWA supervisory positions were filled internally. Also the salaries are above the industry average. It introduced a profit sharing plan for senior employees and stock option programs. All this contributes significantly on tying rewards to the achievement of performance objectives.

For all this reasons I think that SWA management deserves an A for the job done in executing the company ´s strategy.

The approaches and operating practices most crucial in accounting for the success that Southwest has enjoyed in executing its strategy has been their cost containment, recruiting process and organization ´s culture.

Regarding the policies, procedures, and operating approaches that are not working well I can see that there is a weakness regarding the support systems. Many case analysis of the company point out that Southwest must be required to modify and upgrade a significant portion of its internal software to guarantee that its computer systems will function properly.