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1、FortheexclusiveuseofL.SHAWCASE:HR-1ADATE:1995(REV’D.04/05/06)SOUTHWESTAIRLINES(A)“Theworkforceisdedicatedtothecompany.They’reMooniesbasically.That’sthewaythey1operate.”—EdwardJ.Starkman,AirlineAnalyst,PaineWebberAnnRhoades,vicepresidentofpeopleforSouthwestAirlines,waspackingherbriefcaseattheend
2、ofa17-hourday.Tomorrowwasanoff-sitemeetingwiththetopnineexecutivesofSouthwestAirlines.TheagendaforthemeetingwastoreviewSouthwest’scompetitivepositioninlightofrecentactionsbyUnitedandContinental,bothofwhomhadenteredSouthwest’slowfaremarket.Thatday’sNewYorkTimes(September16,1994)hadanarticlethatc
3、haracterizedthesituationasamajorshowdowninairlineindustry:Thisisabattleroyalthathasimplicationsfortheindustry,saidKevinC.Murphy,anairlinestockanalystatMorganStanley.Thebattlewill,afterall,beasmuchatestofstrategyasacontestbetweentwoairlines.UnitedandotherbigcarrierslikeUSAirandContinentalhavedec
4、idedthattheycanlowertheircostsbycreatingaso-calledairline-within-an-airlinethatofferslowfares,fewflights,andfrequentservice.ThenewoperationsareunabashedlymodeledafterSouthwest,thepioneerofthisstrategyandkeeperofthehealthiestbalancesheetinthe2industry.Thereasonsforthiscompetitionwereeasytounders
5、tand.Over45percentofUnited’srevenuescamefrompassengerswhoflewthroughitsCaliforniahubs.Asamarket,theCaliforniacorridorwasthemostheavilytraveledintheUnitedStates,whichhad80percentmoretrafficthantheBoston-NewYork-Washingtoncorridor.YetUnited’sshareinthismarkethadfallenfrom38percentin1991to30percen
6、tin1993.Duringthesameperiod,Southwest’ssharehadincreasedfrom26percentto45percent.Otherairlines,likeContinental,hadalsobeenhurtbySouthwest’scompetition.Southwest’ssuccess1PeterElsworth,“SouthwestAir’sNewPushWest.”NewYorkTimes,June16,1991.2AdamBryant,“United’sBidtoRuleWesternSkies,”NewYorkTimes,S
7、eptember16,1994.ThiscasewaspreparedbyProfessorsCharlesO'ReillyandJeffreyPfefferasthebasisforclassdiscussionratherthantoillustrateeithereffectiveorineffectivehandlingofanadministrativesituation.Copyright1995bytheBoardofTrusteesofth
