• Identify the major problem
The major problem is that because Southwest Airlines' strategy has proven so effective, it will be duplicated and emulated by its competitors to a point where it wouldlose the originality. This could result in competitors offering low rates to the areas covered by Southwest and beyond, making Southwest Airlines' range and limitations more obvious. It would be verypossible in the near future where a big company, with its hubs (something Southwest does not have), basically introducing Southwest Airlines' low-cost model to a wider market, encroaching andoutdoing Southwest Airlines.
• Give your recommendation to resolve this problem, both short term and long term.
A tactic that Southwest Airlines can do to inflict damage to competitors is to slashprices. This type of tactic is typical of a big company that has a monopolistic rule in an industry squeezing other competitors. This tactic is advisable when competitors are near bankruptcy or are indire situations. Because competitors cannot match Southwest Airlines' prices, the most they can do is narrow the gap of the price difference. Southwest Airlines, which has consistently made a positiveprofit, can increase the price gap by lowering their prices. Southwest Airlines will incur losses from this move, but the goal of this move is to drag the competitors further into debt.
• Providesupporting analysis for your recommendation.
With its competitors weakened, Southwest can take the initiative and expand, not foolishly, but with the same drive and precise execution the company wasfounded under. The genius behind Southwest Airlines' success is location; and if researched properly, this can be applied to other areas. The appeal of Southwest Airline is the cheap tickets, as theyoffer none of the luxuries such as in-flight meals. Southwest Airlines' no frills approach may not be pleasing to all, it would be good for Southwest to make a few changes in which the aesthetics...
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