Company Strategic Analysis

This phase of the ICAP is an individual report where the analysis shifts from the industry to the company (or a division within a company). At the beginning of this report, provide the following information about the company:

Focal industry and company name: Southwest Airlines

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Location of headquarters: Dallas, TX

Name of CEO: Gary C. Kelly (Jul. 15, 2008 -)

Mission and/or vision statement: dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.

Stock exchange on which the firm is traded, its ticker symbol, and recent share price (please indicate the date of the stock price information) :


In this phase, analysts are required to:

1. Identify and explicitly state the generic business level strategy (cost leadership, differentiation, focus cost leadership, or focus differentiation strategy) that the company pursues to position itself in the industry you analyzed in the industry analysis. After identifying this generic business-level strategy, provide and explain the evidence that you 4 used to identify the generic strategy. It may be possible that the company is pursuing more than one generic strategy in the industry. In this case, list and defend each one that you identified, and explain which strategy among the ones you identified the focal firm really emphasizes.

After identifying the firm’s generic strategy and providing supporting evidence, discuss its generic strategy in detail by using the course materials (e.g., concepts, theories, and frameworks related to cost leadership and differentiation strategy).

2. Identify major strategic actions that the firm has taken to execute its generic business-level strategy over the past few years; these should represent actions that are critical to the firm’s success and should be linked to the firm’s overall strategy. At this point, if applicable, the firm’s corporate strategy needs to be identified and explained (e.g., diversification, outsourcing, vertical integration, or/and alliances). Include strategic actions associated with corporate level strategies that you identified, if relevant.


3. Evaluate the company’s financial performance using a variety of accounting measures of performance (at a minimum, including profitability, liquidity, leverage, and annual sales growth rate) over the last 2-3 years; additionally, compare the firm’s financial performance to its key rivals (minimum 2) and industry averages; if you are analyzing a division in a diversified firm and performance information for the division is not available, you may use the parent company’s financial information. Use tables or/and graphs to enhance clarity and readability. It is very important to remember that your task includes interpreting, and not just reporting, these performance data. Organize your analysis by using tables or/and figures.


4. Evaluate whether the firm possesses a competitive advantage over its rivals. Discuss the sources of that competitive advantage/disadvantage. Use the VRIO framework to evaluate whether the competitive advantage is sustainable. Use the VRIO template, which was taught in lectures, for your VRIO analysis. If you do not believe that the firm possesses a competitive advantage over rivals, explain the rationale behind this conclusion.


5. Finally, to complete the company analysis, please discuss whether its strategy and capabilities “fits” with the environment in which the firm competes. Put differently, you should draw a conclusion as to whether the firm has resources and capabilities to take advantage of external opportunities and to mitigate external threats. To do this, you should review the conclusions that you drew during ICAP I about the overall industry and consider opportunities, threats, strengths, and weaknesses. Finally, do you expect the firm’s performance to improve, decline, or remain steady for the next 2-3 years? Explain your response.


Students do not need to explain what VRIO is in the paper. Focus on analyses, without adding unnecessary contents.


In total, this Phase II portion of the ICAP report should not exceed ten pages (once again, that does not include any appendices or the required reference page). Students can use either APA or MLA style. Once a student selects a style to use, the student must stick to it consistently throughout an entire document. A document submitted without any binding (staples, clips, etc.) will be subject to a penalty (stapling is strongly preferred to other ways of binding).


As was the case with the industry analysis, you need to use a variety of sources to complete this report. Primarily relying on company sources for your information is not acceptable and will almost certainly lead to a poor performance evaluation.


Keep in mind that your task is to evaluate the company’s strategy, competitive position, and financial performance. Your task is not to “cheerlead” for the company or to paint an overly optimistic picture of the company’s current or future position. Your evaluation will not be harmed if you have chosen a company to analyze that is struggling. It is also not your responsibility to recommend whether CCP should invest in or acquire this company. Rather, your task is to determine whether the company is performing well, is executing a good strategy, and is positioned properly for the future. To do that adequately requires a substantial amount of research and reading from a variety of sources.


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