Business
Southwest Airlines (SWA) has been a strong growth company for the last 40 years mainly due to its focal point on cutting costs. Southwest Airlines (SWA) follows the Cost Leadership Strategy in terms of Porter's four generic strategies and is the epitome of Blue Ocean Strategy in its simultaneous pursuit of differentiation and low cost (Kim & Mauborgne, 2009.
That SWA is cost-focused is evident from Liang et al.'s (2009) analysis of strategies that a company uses to differentiate itself. A successful company stands out by its association in the public's mind, and SWA certainly stands out. Rollin King and Herb Kelleher's objective was: "If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline" (The Rise of Southwest Airlines) and its name, instinctively associated in public image, is synonymous with low cost.
Introduction:
Southwest currently has the lowest operating-cost structure in the U.S. domestic airline industry and consistently offers the lowest and simplest fare (The Rise of Southwest Airlines).
Over the last decade, as many airlines have been forced into bankruptcy, SWA has been able to override the recession, remain profitable, and continue to grow.
To ensure its future success, SWA needs to maintain its cost advantage as well as find a way to work through its weak nesses and deal with its environmental threats. Its weaknesses and threats (as well as strengths and opportunities) are outlined in the following essay. Recommendations are then presented for dealing with some of the weaknesses and threats that face the airline.
Main Body:
Southwest's endeavors to focus on low cost are a strand that runs throughout the airline in each of its four SWOT areas.
Strengths:
The airline is considered the best low cost carrier in recent years.
It has few unfilled seats
It dominates the short haul segment of the airline industry
It remains one of the most profitable airlines
Its low-cost, efficient operations translates to low fares/great value
In each of these ways, SWA plays on its resolution to cut-down costs and benefits as a result.
Weaknesses:
SWA also loses from its emphasis on low-cost as seen from the following disadvantages:
It offers few morning flights
No flights to international destinations
It is dependent on a single type of aircraft - the Boeing 73
It offers only one class of seating -- coach
It does not offer frills such as airport lounges, videos on board, etc.
It can only carry a small amount of cargo and freight
Opportunities:
Since SWA represents a low-cost airline, it may well profit from the following predictable situations:
Growth of Hispanic population and the elderly generation - potential markets
Overall air travel is predicted to increase comparatively rapidly this decade
Longer flights are a growing market
New plane technology, such as the Dreamliner, will increase air travel
Threats:
On the other hand, SWA's focus on low-cost also makes it vulnerable to the following predicted situations:
Fuel price increases could reduce air travel
New government regulations could make air travel more costly
Cost will likely rise since there are not many more areas for cost-cutting
Increased competition may hurt industry profitability (Southwest Airlines SWOT Analysis)
Southwest's strategic choices certainly align with their strategic strategy even to the point of disconnect with some of their other goals. For instance, SWA slants itself and has gained a reputation for its top-notch customer relationships. This was another one of Rollin King and Herb Kelleher's resolutions and SWA's brand promise is 'Dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit' (The Rise of Southwest Airlines). Each and every one of its employees is aligned with this brand promise.
Nonetheless, when SWA found that some passengers...
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