Scenario 2

question 116

Multiple Choice

Scenario 2.1 Use the following to answer the questions.
Southwest Airlines has a history of being able to retain its employees due to the atmosphere and culture of the company. Employees have been known to dress up in costume on an airplane, engage in "games" with the passengers, and generally provide a fun atmosphere for traveling. While other airlines have low rates of customer satisfaction, Southwest tends to maintain a high rating with its customers. Recent gas price hikes have caused most airlines to charge for checked luggage and to fill every flight to its maximum, adding to the negative experience of airline travel. Southwest keeps its costs low through several methods, one being that they do not serve meals on flights, or provide pre-boarding passes. The typical flight is two hours or less and occurs between several selected cities rather than flying to practically anywhere in the country. Southwest is known for its low fares, its dependability, and its on-time flights.
Refer to Scenario 2.1. The fact that Southwest Airlines has a history of being able to retain its employees is a(n) ____ in its SWOT analysis. This low turnover creates more knowledgeable and satisfied employees, a potential _______.

• A) weakness; opportunity
• B) strength; competitive advantage
• C) threat; market opportunity
• D) opportunity; competitive advantage
• E) strength; market opportunity

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Definitions:

Fixed Costs

These stay the same no matter how much output changes.

Marginal Cost

The additional cost incurred in the production of one more unit of a good or service.

Total Revenue

The total amount of money a company receives from its business activities, calculated by multiplying the price of goods or services by the quantity sold.

Total Cost

The aggregate amount of expenses that a company or individual incurs to produce or acquire goods or services.