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Case analysis for Southwest Airlines

1.       The management of the Southwest Airlines has to make decision in its strategy of pricing and service provision after the sudden decision of “Shuttle by United” to leave the Oakland-Ontario market.

2.       First of all the company needs to understand the background of the decision “Shuttle by United” made.

a.       Southwest Airlines could decide to leave the price as it was ($69). This would mean that the company is firm in its strategy, is reliable and is loyal to its customers.

b.      Southwest Airlines could increase the price benefiting from the fact that the strongest competitor is not in the market and the company still can be attractive with just $ 10 increase in the airfare.

c.       Southwest Airlines could keep the price, yet introduce some approaches in improving its service provision “Shuttle by United” applied. (Like having first class seats, other options for mileage bonuses, etc.)

3.       The objective of making a decision is to reaffirm its position in the market in order to attract more (and maybe previous) customers.

4.       The success measure is the increase in ticket sales.

5.        The major constraints in achieving the objective is that the company was completely unaware about the reasons “Shuttle by United” left the market. The case study implies that Southwest Airlines prioritized to have some reaction tailed with the give up of “Shuttle by United”.  The unpreparedness could make the path of seeking the best decision more difficult.

The second issue is that the Southwest Airlines was already facing constraints and recorded less and less revenue when “Shuttle by United” entered the market. The reasons were not studied and may greatly affect any of the decisions taken afterwards. The continuous loss of the revenue and income suggests that the company needs serious readjustments in its strategy, organizational development and modernization in delivering their message to the customers, as well as in contacting them.

 

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