1. What internal resources and assets does Southwest have that may give it a competitive advantage?
2. What are the key forces in the general and industry environments that affect Southwest’s choice of strategy?
3. What growth strategies might Southwest pursue?

Southwest Airlines was the pioneer of “low-cost, no-frills” strategy. From its beginnings in 1971, the company had become one of the world’s most profitable major airlines (44 straight years of profitability as of January 2015). The company was known for its unique cost-conscious yet fun-friendly culture and subsequent high employee loyalty. Its former Chief Executive Officer and founder, Herb Kelleher, was a celebrated leader and had been the backbone of the organization, creating the foundation for its present scale. Gary C. Kelly, former Chief Financial Officer of Southwest, and CEO since July 2004, had grown Southwest into a $1.1 billion company by making some bold moves.

Southwest had established itself based on its low-cost operations and unique corporate culture, and had flourished with organic growth, but as opportunities for this kind of growth had disappeared in recent years, Southwest had been forced to rethink this strategy. In September of 2010, Southwest announced it was acquiring AirTran. Although this would give Southwest its desired foothold in Atlanta and flight access to Puerto Rico, Mexico, Central America and the Caribbean, this acquisition was a major change in Southwest’s growth strategy. The AirTran acquisition made Southwest Airlines a much larger carrier with access to more potentially lucrative markets, but a stagnant air travel market and consolidation among the more dominant competitors meant Southwest had to find additional ways to boost profits  with possible options such as increased fees that might challenge its low-cost perception among air travelers.

In addition, as Southwest grew, so did the operational costs: fuel and maintenance on now two different types of aircraft. This plus the challenges of merging employees from two different cultures into a smoothly functioning crew scheduling system had caused recent problems. Was Southwest growing too big and ignoring essential investments that had made the airline so successful for so long? Would the success saga continue under Kelly when the core elements of the company’s original strategy – low-cost, organic, and domestic point-to-point short-haul growth and customer-centric culture  were all simultaneously changing?