Southwest Airlines
Air travel is still the preferred means of transport in the United States of America largely because it is faster. However, it has in the recent times experienced decreased growth from the peak in before the 1990s. The period between 1980 and 1990, there was a sharp increase in the number of people travelling by air. Today, major carriers have cut costs in the face of intense rivalry and low profit margins. Nonetheless, the economic downturn experienced in the U.S. has not made the situation any better for the aviation industry. Many airlines have greatly been affected by the increase in fuel prices and demand for high cost of labor. However, through product and service differentiation innovation strategy of low cost, reward and convenience, Southwest has successfully distinguished itself from market competitors in a bid to maintain profitability in this excessively aggressive industry.
Differentiation Innovation Strategy
Products and services can be differentiated in a number of ways for them to stand out as distinct. Southwest Airlines has two main differentiation innovation strategies in place, pricing and convenience. Southwest Airlines charges the most affordable fore in the market and is still able to make a profit. The low fare strategy, as made Southwest formidable in the airline industry and competitive in the transport sector as a whole as many opt to fly than drive. In addition, the airline has secured a prominent market position by defining a business model that adopts one type of aircraft; this has made operations and maintenance manageable. They are able to train their mechanics on the Boeing 737, they stock inventory for...
Southwest Airlines The airline industry has been one that has consistently lost money during the last decade. Even before that, if an airline did not have a good business strategy, they were most likely doomed to failure. Many people do not remember Braniff, TWA or Pan American, but for a long time they were among the largest air carriers in the world. He present model, for airlines as well as other
Southwest Airlines Analysis Established in 1971 by Herbert D. Kelleher and several business partners, Southwest Airlines has secured a strong position in the airlines industry over the last 35 years. Southwest and its wholly owned subsidiary, Air Tran, serve a combined 103 destinations in 41 U.S. states, the District of Columbia, the Commonwealth of Puerto Rico, and six near-international countries (Johnson, 2011). Both entities combined offer over 4000 daily flights. The
And many have got successful too in earning the market share. The emerging competition by new companies is a growing threat for the company and it should be tackled properly to avoid any future disturbances. In order to further describe the competition Southwest Airlines is facing a Competitive Profile Matrix is designed. The following Competitive Profile Matrix tells about the tough competitors which are in a good position to have
The secondary gross margin measure, Gross Margin after Depreciation, shows the costs of having a rapidly growing infrastructure to support new routes and the purchase of additional planes over the five-year period. The reduction Gross Margin after Depreciation would be flat or slightly down during a strong economic period as well. This measure of gross margin indicates that the capital investments that are often amortized over seven years as
More specifically, since Southwest invests heavily in both training and the "attitude" of its employees, the fact that all economically motivated employee separations are voluntary buyouts allows the company to protect that investment. A happy workforce is more productive, which further helps the company manage its costs. Compared to the industry average, Southwest serves more than twice as many customers per employee and gets by with 8% fewer employees per
Alternative Strategies. The company should focus on expanding its service trans-North America, and should further look into the possibility of launching trans-Atlantic operations. The company at the same should start dealing with Boeing for the purchases of advanced aircrafts. The company should emphasis more on providing insurances of the passengers. The advertising campaign should be evolved with new spirit irrespective of how well the come performs; the advertising campaign should be in
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