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Southwest Airlines strategy
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| Words: 869 | Submitted: 13-Jun-2011
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DescriptionThe objective of this capstone project is to evaluate the standing of Southwest Airlines comparing the performance of the airline with that of the industry in the United States and to undertake an external and internal evaluation of the organization. The paper also attempts to present an in-depth analysis of the strategic alternatives available to the airline and make a suitable recommendation for improving the operational performance of the company
Southwest Airlines strategy of focusing on short haul passenger and providing rates as low as one third of their competitors, they have seen tremendous growth in the last decade. Market share for top city pairs on Southwest's schedule has reached 80% to 85%. Maintaining the largest fleet of 737's in the world and utilizing point-to-point versus the hub-and-spoke method of connection philosophy allowed Southwest to provide their service to more people at a lower cost. By putting the employee first, Southwest has found the key to success in the airline business. A happy worker is a more productive one as well as a better service provider. Southwest will continue to reserve their growth in the future by entering select markets only after careful market research.
Southwest Airlines faced many barriers to entry from the fierce competition of other airlines in the industry. Though competition was fierce, Southwest Airlines managed to succeed by doing things differently. Their mission was to provide affordable air travel to those who would not normally fly. Contradictory to the rest of the airline industry, Southwest maintained a profit while keeping its fares low. Southwest was unique to the industry in two ways. They focused on the short haul traveler and used a point-to-point method of flight connections.
The short haul traveler is the backbone in which Southwest was built upon. The market for short distance airline flights was large enough to allow Southwest to maintain a profit for over 30 consecutive years. Shorter flight times allowed for more flights to take place per day. With the industry average sitting at one or two flights per day, Southwest set itself leaps apart by averaging 10 to 12. Maximizing utilization and minimizing ground time were the key elements to Southwest's profitability.
If the short haul passenger was the backbone of Southwest Airlines success, then their 737s were the lifelines that supported it. By choosing the 737 as the airplane for all of Southwest's flights, the company saved time and resources in training its employees. The crew could be easily substituted for one another due to the extensive training on the 737. Low costs and, therefore, low fares are an enormous competitive advantage, when combined with their high-quality and loyal workforce. A very unique culture was found at Southwest Airlines among all of its employees. The company generated a culture around prioritizing their workers over their customers. This family oriented atmosphere that was created enabled worker retention and customer service to skyrocket. Southwest was ranked number one among all major US carriers several times on a customer service as well as safety, price, on time performance, and baggage handling basis.
Though Southwest has many extravagant features to its organization, ...
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