SOUTHERN NEW HAMPSHIRE UNIVERSITY
Graduate School of Business
Program:
SNHU School of Business Graduate Program
Course Title : Marketing Strategies – MKT 500
Instructor: Jeannemarie Thorpe
Due Date: Monday, January 26, 2004
Submission Date: Monday, January 26, 2004
Type of Assignment: Case Analysis
Title of Assignment: Southwest Airlines – 4th Case Study
Student Name: Cevdet KIZIL
Student Phone #s: (603) 626 9302
Student E-mail: [email protected]
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Monday, January 26, 2004
Date:
Southwest Airlines
The problem for Southwest Airlines is that United Airlines makes two changes in
it’s “Shuttle by United” initiative in terms of price ($10 increase of fares) and servicing
(withdrawal from Oakland-Ontario market) and they are not sure how to react this.
Southwest has some constraints to solve the problem. First of all, because the
changes just emerged; they can’t know if United is changing it’s strategy. Even if they
could be sure that United was changing it’s strategy, it’s still impossible to determine that
new strategy. Accordingly, the other constraint for Southwest is that their reaction
strategy is not yet clear. The next constraint is that even if they could decide on one
reaction strategy against United’s action; they can’t forecast the effects on their business.
The final limitation (constraint) to solve the problem is that Southwest can’t find out the
link between United’s pricing action and withdrawal from Oakland-Ontario market.
Southwest has some alternatives to solve the problem. First of all, as you can
easily observe in the constraints paragraph; many factors are unclear. In my opinion; this
is because it’s still very early to give a healthy decision. Since the new strategy will affect
Southwest as a whole, they must not do it in a rush. So, my first suggestion is that they
should wait for now. Then; Southwest should prefer a defensive strategy. Because they
are already in an advantageous position compared to United. Thus, there is no need to
suggest an offensive strategy like increasing the fares; because other competitors can
easily benefit from this situation. Another alternative can be doing a research on similar
cases from the past, even if examples are from the other industries. Finally, Southwest
also has the option of hiring consultants, strategists and analysts so that these people
outside the business can discuss the alternatives with managers.