You are working as an advisor to a major mutual fund senior manager. This mutual fund has a large investment in Southwest Airlines. Now that Southwest has completed its merger with Air Tran Air, your boss, the senior manager, wants your specific advice as to whether this merger will affect the strategy and culture of Southwest Airlines. Can they maintain their laser like focus on their basic strategy or will Air Tran Air dilute Southwest’s strategic message? Your boss will be trying to decide if he should retain his investment in Southwest or sell it. Your recommendation will be crucial in his decision.
You are to analyze the situation in the Southwest case (2013 Inkpen, Thunderbird School) when you make the recommendation. This is an opinion paper. You should not use other outside resources.
Make your recommendation to your boss – either “hold” or “sell” (pick one). Back up that recommendation by highlighting the distinctives in Southwest’s strategy.
Mageretta shows how Porter describes five tests of an excellent strategy:
· A unique value proposition
· A different tailored value chain
· Clear trade-offs, and choosing what not to do
· Activities in the value chain that fit together and reinforce each other
· Strategic continuity over time
Show examples of how these tests relate to Southwest and how they either can be copied by competitors (building the argument to sell the investment) or how the way they all work together to make it difficult or impossible for competitors to match (building the argument to retain the investment).
Highlight Air Tran Air’s choice of multiple different types of planes, their international presence and the possible differences in culture.
This analysis should be about 5 pages long and should begin with the executive summary outlining your recommendation.