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Executive Summary
Case Statement
Southwest Airlines operates in a highly competitive industry where there are a limited
number of companies fighting to be the consumers choice to get them to their destination. To
stay ahead of the competition, new strategies must be implemented constantly.
Mission and Vision Evaluation
Using matrix evaluation tool Southwest does not score very well in touching all areas of a
good mission statement. However when looking at both the mission and vision together and
since it is a service provider as opposed to offering a product, the statements are very effective in
delivering a quality message to its customers, employees and shareholders alike.
Milestones
Management can be credited with a number of important highlights throughout its
history. Closing out the books on 2015, Southwest reported its 43 consecutive year of
profitability. That is an unheard of accomplishment in the airline industry. 2014 marked a
critical milestone for the company with its acquisition of AirTran. Upon completion, Southwest
has taken its first step towards the global markets by launching Southwest-branded flights to
Punta Cana, Dominican Republic, and Mexico City.
External Assessment
Southwest has a number of opportunities that it could take advantage of to further its
standing in the industry. There is a major opportunity for the airliner to expand to its global
reach into other countries. Its network is based almost 90% domestically and the expansion
would also take advantage of the predicted doubling of air travel in the next 5 years.

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Competitors have already began to model after Southwest in the low cost arena and major
airlines like Delta are establishing a global presence currently.
Internal Assessment
Southwest is one of the most financially sound airliner in its industry. Having been able
to keep costs under control, it can offer one of the lowest prices around for air travel while
providing one of the highest rated customer service experiences. Again one of the major
weaknesses for Southwest is not having a well established global network, it relies too heavily on
the domestic markets that are subject to a downturn in the economy at any time.
Industry Analysis
The rivalry amongst the airline companies is what keeps it striving to be the best low cost
carrier in the market. Most other airlines have differing strategies; they offer far more attractive
services such as in-flight entertainment, complimentary snacks, and assigned seats. But
Southwest has made up for its amenities with wonderful service and appealing pricing. Rivalry
amongst airlines is an ongoing battle with each carrier competing in every way to steal market
share and customers from each other by any means necessary.
Financial Analysis
The superior financial situation at Southwest Airlines is decorated by its 43 years of
profitability. Other highlights of its financial situation include; being the only airline to have
revenue growth last year, dividend growth of 73% over the past 5 years and has a staggering 0.32
debt to equity ratio as compared to the industry average of 1.13.
Competitive Strategies
In order for Southwest to stay competitive, three strategic alternatives were suggested to
management based on the finding of the SWOT analysis. The three choices were to add in-flight

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entertainment options aboard flights, expand operations internationally to establish a global
presence and create a new priority seating section. All choices would address opportunities and
weaknesses currently at Southwest.
Recommended Strategy
After evaluating each strategy using the QSPM, it was determined that international
expansion would address the most company weaknesses while taking advantage of the most
strengths and opportunities. Global air travel is predicted to double in the next five years,
Southwest has a chance to tap into a market that brings the potential to increase market share
with the recommended strategy. Establishing new markets in areas such as Europe and Asia can
provide the growth to get Southwest towards its goal of being the most flown airline.
Implementation Plan
Implementing a plan to begin operations in another country is a major step for any
company. The most important part of the plan is getting all of the necessary approvals before
anything can begin. Enough due diligence was done during the planning phase that it left for a
smooth transition of implementation. Marketing teams have formed an international campaign
geared at a variety of media outlets to spread the word of the upcoming expansion. The hiring
process is underway searching for the best individuals to uphold the top notch Southwest
customer service. Pilots have had their contract renegotiated in anticipation of the new routes. A
new fleet of Boeing 737 MAX airliners are being customized for Southwest to cater to the
needed comforts of long haul flights. The new reservation system is being integrated into the
current system for optimal reliability. Finally, the construction of state of the art terminals has
begun at two of the largest international airports in the world, London Heathrow and Beijing
Capital. The final step in the plan was to obtain the funding in order to implement this strategy.

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The total cost was figured to be around $1 billion and management has made the decision to
finance by using an all debt strategy. The company is able to take on a large amount of debt due
to its current low debt to equity ratio. This choice also prevents the company from diluting any of
the current shareholders while maximizing the EPS. Once completed, its projected that the
expansion plans will hit the goal of increasing revenues by at least 10% annually.