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Southwest Airlines was founded in an environment that was hostile to its unique low-cost business model. A major competitor, Continental Airlines, tried to suppress Southwest's growth through legal and regulatory means. This almost led Southwest into bankruptcy. However, the founders maintained the airline's low-cost flights and positive company culture, which helped the employees remain dedicated. The CEO Herb Kelleher also regularly interacted with employees and customers to build trust and loyalty. These strategies helped Southwest grow profitably despite the difficult competitive environment.

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156 views2 pages

db1 Org

Southwest Airlines was founded in an environment that was hostile to its unique low-cost business model. A major competitor, Continental Airlines, tried to suppress Southwest's growth through legal and regulatory means. This almost led Southwest into bankruptcy. However, the founders maintained the airline's low-cost flights and positive company culture, which helped the employees remain dedicated. The CEO Herb Kelleher also regularly interacted with employees and customers to build trust and loyalty. These strategies helped Southwest grow profitably despite the difficult competitive environment.

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How did the environment in which Southwest Airlines was created, impact the development of

the company? Please discuss the key aspects of the enabling environment (as discussed in the
readings) as it related to Southwest Airlines at the time the company was founded.

Organizations do not exist in a vacuum. Each organization is set in a particular

environment to which it is inextricably linked[CITATION Lus02 \p 23 \l 1033 ]. In the case of

Southwest Airlines, the environment was hostile from competitors. Because Southwest Airlines

had a different business model from other airlines, one particular airline (Continental) decided to

use political and regulatory means [CITATION Sta95 \p 2 \l 1033 ] in the courts of law to suppress

their growth in the industry. This was going to keep Southwest Airlines from operating

nationally and confine them to operate within Texas and other four states (Louisiana, Arkansas,

New Mexico, and Oklahoma) as stipulated in the Wright amendment. This environment almost

led the airline into bankruptcy. But because the founders of the company had a vision and

strategy to keep the airline operational, they decided to maintain cheap flights and a good

company culture that kept their employees dedicated to the growth of the airline.

One of the founders and CEO, Herb Kelleher, constantly interacts with employees,

customers and routinely visits maintenance facilities [CITATION Sta95 \p 7 \l 1033 ]. These

interactions build trust and customers remain loyal to the airline which means more flying with

Southwest Airlines and increase in revenue for the company. The cheap direct flights which are

the airline’s strategy to survive in the business has helped them grow and remain profitable. To

encourage employees, the company promotes a culture of inclusiveness and creativity.

Employees are also treated to annual parties as the pays serious attention to celebrations and

parties[CITATION Sta95 \p 7 \l 1033 ]. This has become a cultural norm at Southwest Airlines as

employees have embraced it and value the work environment and the company itself.
References

Lusthaus, C., Agrien, M.-H., Anderson, G., Plinio, G., Carden, M., Rey de Marulanda, N., &

Smutylo, T. (2002). Organizational Assessment: A framework for improving

performance. International Development Reserach Centre.

Starkman, E. J. (1995). Southwest Airlines (A). Stanford Graduate School of Business, 2.

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