Q1. What is Southwest's strategy? What is the basis on which Southwest builds its competitive advantage?Q2. How do Southwest's control systems help achieve the company's strategy? Southwest Airlines' strategy is best explained by its co-founder Herb Kelleher during a speech at Wharton: "It's an obsession with keeping costs low and treating employees well and a commitment to managing the company during boom times , with an eye to the busts that will inevitably follow. Do it and most of the rest will follow.” As long as this strategy is well known in the industry, it has proven difficult to copy. Let's see what Southwest does and others don't key strategic areas:1. Operating Costs2. Operating CostsSouthwest Airlines has the lowest fares among its competitors. the Boeing 737 series. Competitors use all types of airplanes and models. This saves Southwest millions in maintenance costs, spare parts inventories and mechanic training. Plus, every pilot and crew member will be familiar with each airplane. On the other hand, using one aircraft type gives Southwest the opportunity to move planes across the route network without costly reconfigurations. Southwest uses less congested airports (secondary or downtown) and obviously have lower average fares. Most Southwest flights are point-to-point rather than hub-and-spoke competition. This strategy and the short-haul approach with an average flight time of 55 minutes minimize the time the aircraft remains on the ground waiting for delay-prone hubs. According to FlightStats, on-time performance...... middle of paper ......es High on fuel coverage and “servant leadership”: Knowledge@Wharton (2008) at http://knowledge.wharton. upenn. edu/article.cfm?articleid=2006 (accessed August 19, 2008) • What Makes Southwest Airlines Fly: Knowledge@Wharton (2003) at http://knowledge.wharton.upenn.edu/article.cfm?articleid= 753 (accessed: 19 August 2008) • Pasztor, Andy and Prada, Paulo (2008), “Southwest Set To Challenge FAA Penalties” at http://online.wsj.com/article_print/SB1219796394831.html (accessed: 27 August 2008) ) • Heaster, Randolph (2008), “Southwest Airlines to Cut 190 Flights This Winter” at http://www.kansascity.com/business/v-print/story/768458.html (accessed August 26, 2008) • Bryant, Elizabeth (2006) , “Southwest Airlines and the MBTI Assessment of Creating a Corporate Culture that Flys” at http://www.cpp.com/pr/southwest_airlines_2006.pdf (accessed August 29 2008)