Case Study



Effectivenessof Southwest Airlines’ Leadership

Effectiveleadership is the ability of a leader to develop and sustainsufficient momentum that ensures that the competitors and themarketplace do not pass the organization he is leading. An effectiveleader must be in a position to achieve different goals that make theorganization he is leading competitive (Adair,2009). The leadership of Southwest Airlines was effective for 36years under the leadership of Herb Kelleher. This is because thisleader was celebrated for making the organization a market leader inlow-cost, no frills. Besides, under his leadership, the culture ofthe organization ensured high employee loyalty, which was a criticalelement in achieving success. Furthermore, under the leadership ofKelleher, the organization recorded high profits, which was anindicator of effective leadership. However, the leadership of theorganization became ineffective upon Kelly taking over theleadership. The leadership of Kelly is ineffective since theorganization has lost its competitiveness to other airlines in themarket and the employee loyalty has been threatened by the laborunions. Besides, the leadership of the organization is not effectiveunder the leadership of Kelly because the organization has lost mostof its advantages, which made it competitive. In case the leadershipof the organization was effective, the organization could haveindicated a successful trend in its different goals such as ensuringemployee satisfaction however, this is not the case. Therefore, theleadership of Southwest Airlines is not effective under theleadership of Kelly.

Basisof Southwest’s Competitive Advantage and the Potential Challengesto its Strategy

Oneof the ways in which Southwest Airlines ensures its competitiveadvantage is through low-cost strategy. Through the low-coststrategy, the organization is capable of charging low fare to itscustomers compared to its competitors (Lauer,2010). Another strategy of maintaining competitive advantage isthrough the culture of putting its employees first since itunderstands that through keeping its employees first, or giving themfirst priority, the employees will be capable of serving customers ina better way. By using this strategy, the organization ensures thatit maintains employee loyalty, which helps in motivating theemployees. The organization maintains the loyalty through ensuring acompetitive wage-rate to its employees. In addition, the airline hasmaintained its competitive advantage through ensuring customersafety. However, the organization has not been capable of competingeffectively in the recent past due to some emerging challenges to itsstrategy.

Theorganization is facing the challenge of the emergence of otherlow-cost players in the market such as AirTran and JetBlue. Theemergence of other low-cost players has become a challenge toSouthwest maintaining its competitive advantage using the low-coststrategy because the emerging low-cost players uses differentiationtoo as their strategy, which Southwest Airlines has not been capableof applying (Lauer,2010). Another challenge that the organization is facing from itscompetitive advantage strategy entails increased pressure from itsemployees as they push for higher compensation. The organization hasnot been capable of continuing to offer its employees competitivewages since they have not been involved in restructuring of laboragreements, a move which other competitors in the market haveconsidered. This has resulted to Southwest Airlines offering lowwage-rates compared to its competitors. The low wage-rates havelowered the employee loyalty, which was a source of theorganization’s competitive advantage. Besides, the organization haschallenges with its labor unions, which still acts as a threat to theemployee loyalty culture. In addition, the airline has a challenge ofmaintaining safety checks, which poses a challenge to its competitiveadvantage.

GrowthStrategies for Southwest

Inorder to realize growth, Southwest airlines can have differentstrategies. One of the strategies that the organization can choose isto have a merger with another carrier. Through considering a merger,Southwest airlines will be in a position to compete effectively inthe market because it will have an opportunity to cut its operatingcost further since it will share costs with the carrier that it willmerge with (Kumar,2010). This will be an opportunity for growth since it will becapable of planning for its future operations. Another strategy thatthe organization can choose is entering another outside market, whereit can seek partnerships with the operators in the markets. This willprovide an opportunity for the organization’s growth since it maytake the advantages of the partners in establishing its growth.

Besides,Southwest airlines may achieve growth through rebranding its company.Rebranding the organization will help the organization enter themarket as a new carrier that will have different corporate cultureand new leadership structure, which will be critical for therealization of growth (Kumar,2010). Through rebranding, the organization may adopt a newcompetitive strategy such as the differentiated strategy, where theairline can operate as a leisure carrier. This can help theorganization in establishing new customers in the market that arecritical in realizing growth. Furthermore, through rebranding, theorganization will be capable of changing its leadership to a newleadership that can deliver successes that can lead to the airline’sgrowth.


Adair,J. E. (2009).&nbspHowto be a successful leader.London: Pan Books.

Kumar,D. (2010).&nbspEnterprisegrowth strategy: Vision, planning and execution.Farnham, Surrey, England: Gower.

Lauer,C. (2010).&nbspSouthwestAirlines.Santa Barbara, Calif: Greenwood.