Instruction: Answer ALL questions. Case Study: Southwest Airlines Company Since 1973, Southwest Airline, major air carrier in the United State, has maintained a profit every year consistently from the start. The airline has been the market leader of domestic air travel in the United State for almost a decade. This is because Southwest Airlines provided most of the air passengers to U.S. destination than any other airline in the U.S. Since 20th century, Southwest Airline passengers had increased from 72.6 million to more than 100 million customer annually. Their mission is to apply the highest quality of their service with a sense of friendliness, warmth, individual pride, and company spirit. While the vision of the company is to "Become the world's most loved, most flown, and most profitable airline." Southwest's 2 big core values are LUV \& Fun. LUV is for treating individuals, co-employees and customer with respect and dignity. While Fun have a straight meaning of entertaining while working on their job. This also includes company parties and celebrations such as Halloween parties. This is reflecting their core values of Live the Southwest Way, (Warrior Spirit, Servants Heart, and Fun-LUVing Attitude), which represent their culture for more than 35 years. Moreover, the company wants to remain their strategic objective of being the safest, most efficient, and most reliable airline in the world. Added to that, the company also wants to flavor their shareholder with a great dividend making it one of the most interesting domestic airlines among other airlines. In 2016 , the company manages their net income of $2.24 billion higher than 8.6% in 2015 . Their total revenue topped $20 billion for the first time. However, their seat mile or capacity growth slowed down by 1.6% from 7.2% in 2015 to 5.7\% in 2016. This is due to the low cost airline competition and the growth of domestic industry (DiChristopher, 2016). However, Southwest Airlines still remain in a good position, since they are able to lower the fare price by 3.7% resultantly from the lower fuel price causing the net profit of the airline still look good (Southwest Airline Co., 2016). Added to that, Southwest Airlines is continuing merger or acquisition with AirTran in order to expand more in the market. The integration of Southwest into AirTran allow the both of the airline's customer to book connecting journey between two carriers and fly to more than 90 destinations (Mouawad, 2010). With these all values, Southwest airline have an opportunities to improve their excellent operations, their outstanding customer service to be more efficient in the future (Southwest annual report). Southwest Airline is a low cost airline based in the United States. Herb Kelleher established the airline in 1967 and start operating in 1971. In 1966, Rolling King and Herb Kelleher got together to start a low-fare airline that would transport passengers between Dallas, San Antonio, and Houston. Due to the complaints from the air passenger that the price of the flight was expensive, therefore, both of them want to start airline business. Their main concept was to attract customer by providing convenient schedules within time and have a good experience while on flight. Since then, the company reputation increases, making it one of the most chosen airlines among other airlines. Their financial position show some strength, debt from the total capital, including aircraft leases, declined to more than 32%. Also, their investment increases to more than $3 billion dollar, making it one of the most valued airline company (Southwest Airline, 2017). They were able to return $1.97 billion to shareholders with $222 million in dividend and $1.75 billion in share repurchase. In May 2016, the company was able to increase its dividend by 33% to $0.10 per share (Southwest. Airlines Co., 2016). Southwest Airline has about 53,536 employees and provides more than 3,500 departures during a peak season. For the recent year, Southwest Airline has been using only one model of aircraft called Boeing 737 and in this coming year, the company plan to increase the number of aircraft from 723 to 750 by the end of 2018. For this year, October 1, 2017, the company planned to launch Boeing 737-8 MAX, which is a new model, to their customer. They also planned to retire 79 classic aircraft (B737-300) and acquire 39 new Boeing 737-800. The new model has a total of 175 seats more than the former Boeing 737 of 38 seats. By the end of the year, the company will end up having 703 aircraft, however, all of the retired one will be replaced with new Boeing. With their new aircraft, the company expected to reduced fuel consumption, maintenance cost, and out-of service time (Southwest Airlines Co., 2016). Current Situation Southwest Airline is a major air carrier based in the United State offers both domestic and international flight. The company tries to offer low price ticket to the customer. By that, the growth of the company can be slow since there are many low-fares company in the airline market. For Southwest Airlines, the company aim to achieve their mission and vision of being the highest customer service with the warmth and friendliness. In 2014, the company was able to lowering their cost by cost-cutting the fuel-price resulted in the record of operating income of $4 billion. To differentiate themselves from the rival, the company mentioned that what's make them survive in the industry are because of using only single aircraft type, creating an operationally efficient point-to-point route structure, and keep their service high. The first strategy is to have only one model plane, which is Boeing 737 . With this only model, the company uses it to train employees, minimize the size of spare parts inventories, and interchangeable for the maintenance. This one type of model helped the company to achieve cost-saving benefits. Another strategy is point-to-point route system which help the company to minimize the time aircraft at the gate offer more flight to the customer. Unlike other airline company, that arrived at and departs from a hub in a peak hour creating workload in the airport and gate utilization. The last point is to offer high service standard to the customer by providing more service center in Chicago, Atlanta, Houston, Oklahoma City, Albuquerque, Phoenix, and San Antonio. The company aim to use another Boeing model to save their cost, which is considered to be one of another strategy to be able to stay in the airline industry. Adapted from: Harris. R. (2009). Strategic Management, 13th Edition. Pearson Education, Inc., Prentice Hall, One Lake Street, Upper Saddle River, New Jersey. Questions: 1. Discuss what are the company's resource strengths and weaknesses, and its external opportunities and threats. Provide TWO (2) examples of each components. (20 marks) 2. Explain why Soutwest Airline needed to acquire other company? Give TWO (2) examples to defend your argument. (10 marks) 3. Explain which part of competitive advantage used by Southwest Airline to maintain good operations. Provide TWO (2) examples to support your answer. (10 marks) 4. Discuss how vision, mission settings influence Southwest Airline success? Give TWO (2) examples to support your answer. (10 marks) 1. Discuss between cost leadership strategy and differentiation strategy. Your answer is required to be supported well by TWO (2) examples from real world organizations. (10 marks)