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Business - Management
Southwest Airlines is the nation's low fair, high customer satisfaction airline. It mainly serves short haul cities, offering single class air transportation, which aims for the business commuter as well as leisure travelers. "The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit" (About Southwest, 2010). Southwest's mission statement expresses its core competency in its dedication to the highest quality of customer service. Their strategy is explained for providing this high quality customer service by providing warmth, friendliness, individual pride and company spirit. What their mission statement does not state is the organization's strengths, values and purpose. They also don't explain what the organization is trying to accomplish. These are two very important things that should be included so that the mission statement would be complete.
Southwest Airlines uses a differentiation strategy as their primary business strategy. A differentiation strategy calls for the development of a product or service that offers exclusive attributes that are valued by consumers and that consumers recognize to be better than or different from the products of the competition. The value added by the exclusivity of the product may permit the company to charge a top price for it. The company hopes that the superior price will more than cover the additional costs acquired in offering the exclusive product. Because of the product's exclusive attributes, if suppliers augment their prices the company may be able to pass along the expenses to its clientele who cannot find alternate products easily (Porter's Generic Strategies, 2010).
When looking at this strategy in comparison to the company's strength of a strong brand name it is easy to see that they work hard to their brand name synonymous with low air fares. In regards to the weaknesses they again try to manage the current economic trends with keeping air fares low for their customers. They have an opportunity that lies in technology development. This is an area that they have just recently begun to look at, but is definitely one that they need to explore more deeply. This is an area in which they could really excel. Developing new ways to make the customer experience an unforgettable one is a good way to separate themselves from the competition and encourage repeat business at the same time. The biggest threat that lies in the airline industry is that of competition. There are several other low cost airline carriers in the market besides Southwest. There are two main things that separate Southwest from the rest of the competition. The first is their geographic locations of where they fly and the second is their 2 bags fly free policy.
These two things that separate Southwest from their competition are the things that they need to continue to do. They have to continue to set themselves apart from their competition. Providing the little things that make the customers experience above and beyond what they could get at a different airline is what makes people come back. Southwest needs to concentrate on making the customer experience the best that it can be. Happy flights lead to repeat customers and in the end a bigger bottom line.
Southwest Airlines has developed their competitive advantage on two fronts. The first is that of being a low cost airline. Based upon ticket price they have set themselves apart from the major airlines around the world. Competition necessitates companies to make decisions as to what to do and what not to do to achieve growth and uphold survival. Southwest's strategy is the creation of a customized set of best-fit actions. Southwest began as a low-cost, no accompaniments airline thirty years ago. It has grown to be a national airline, but still has its fundamental cost structure. Southwest has never served meals or reserved seats in advance. It still has what is essentially a linear route structure. It only flies one kind of airplane and it only stays in high-density markets. Its operation is highly competent. The end consequence of this strategy is a sustainable, competitive advantage and greater profitability (Chan, 2007).
Low expenses have given Southwest its market position and its competitive advantage of having the country's lowest fares. And that, in turn, has fashioned a phenomenon known in the airline industry as the Southwest effect. Airports served by Southwest have lesser than average fares than those that aren't because other carriers feel obliged to match Southwest's fares. Concern about expenses is also the reason that Southwest keeps its liability at the lowest level in the airline industry, with a debt-to-equity ratio of twenty five percent (What Makes Southwest Airlines Fly, n.d.).
The second competitive advantage that Southwest has established is that of 2 bags fly free. This is not something that any other airline does and truly sets Southwest apart from their competition. In today's economy it is expensive enough to pay to fly as it is, but to have to pay exuberant amount for you baggage to fly is ridiculous. While bag fees have become the standard amongst the competitors, Southwest has stayed true to their status as the rebel of the airline industry by not charging for bags (Special Offers, 2010). Southwest has the right idea and it attracts them quite a bit of business.
Recently Southwest has made a move to improve itself by buying out AirTran. In May 2011, Southwest Airlines announced the closing of its attainment of AirTran Holdings, Inc., the former parent company of AirTran Airways, Inc. (AirTran). Southwest will now begin the slow incorporation of AirTran into the Southwest Airlines brand. Ultimately, the integration of the two airlines will result in a development of previously low fares and outstanding service for customers, but change will not be instantaneous (Acquisition Information, 2010).
Southwest presently anticipates that the Federal Aviation Administration (FAA) will grant the airline a Single Operating Certificate (SOC) in the first quarter of 2012, at which time Southwest will work toward complete integration. After SOC is attained, Southwest will gradually transition the AirTran fleet into the Southwest paint system. Eventually, this attainment will generate an expanded low-cost, low-fare carrier with exceptional customer service and an exceptional culture. Consumers will be informed all through the process with updates on southwest.com, airtran.com and lowfaresfarther.com. Meanwhile, employees from both airlines will carry on doing what they've always done, which is delivering world-class customer service, operating professionally and safely, and taking care of their customers. Both Southwest and AirTran have low-cost viewpoints, and as a collective company they intend to strengthen and increase low-cost competition (Acquisition Information, 2010).
In order for a company to be successful they have to figure out where they currently are, where they want to be and how they are going to get there. In Southwest's case, they have done a very good job in figuring out where they are. They have done a mediocre job in laying down where they want to be. They have some things defined that they would like to see in the future, but not everything is spelled out. And since they have not completely defined where they are going, the roadmap to get there is also incomplete.
The Wall Street Journal says Southwest generally is regarded as the best-run domestic airline, which long has benefited from a strong safety record. The company frequently is praised for excellence. Fortune listed it among America's top 10 most admired corporations; Business Week listed the airline among its Customer Service Champs; and Hispanic Business named it one of America's top companies for diversity. While Southwest Airlines is not perfect, this company is succeeding at many levels. It has spent years cultivating loyalty by providing innovative and reliable service at reasonable costs. In an industry overwhelmed by financial…[continue]
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