Southwest Airlines Analysis Entrepreneurial and Strategic Class - Case Study Example

Southwest Airlines case analysis Entrepreneurial and Strategic Executive Summary The case study report covers the challenges that Southwest Airlines experiences in its operations as a leading domestic airline in the US. These challenges are experienced in its various fields of operation which include; pricing, staff welfare, dealing with competition, fuel prices, customer satisfaction, technology, repairs and maintenance, international market entry and marketing and advertisement. The main findings of this report are; Southwest Airlines cannot dictate the price of various flights due to many players and competitors in the market. Staff management needs to be friendly to the welfare of the staff There is constant threat from established competitors as well as new entrants. Unpredictable fuel prices hinder the profitability of the air transport business Customer satisfaction needs to be emphasized to encourage brand loyalty. Southwest Airways needs to adapt to new technology to operate effectively and increase its market share. Frequent repairs and maintenance pull down the profits The international market has opportunities that need to be exploited. Marketing and advertising should be an unending practice for Southwest Airlines. To counter these challenges, Southwest Airlines needs to use economy of scale instead of charging high rates, increase focus on clients motivation and introduce new schemes to benefit the staff as well as Southwest airlines, analyze the clients and find counter measures, adopt fuel hedging to reduce risks of fluctuating fuel prices, focus on customer satisfaction to create loyalty, adopt new technology to operate effectively, replace old aircrafts and to focus on constant and continuous marketing and advertisement. With the setting and structure of Southwest Airlines, these findings can be implemented do as to offer maximum return on investment for Southwest Airlines. There is no technical aspect among the finding that would require an expert to facilitate, thus keeping the Implementation plan at zero budgets. Product pricing With an increase in client number form 106 million in the year 2010 to 115 million in the year 2013; Southwest airline enjoys the largest share of domestic travelers in the US. This is mostly due to provision of low cost flights. Southwest airline continues to market its self as the provider of the cheapest flights in US. The sustainability of the low cost air travel is made possible by economies of scale. Southwest Airlines is able to make huge profits by distributing the costs of operation to the huge number of customers seeking their services. These costs are shared among the clients thus making each individual client to pay less for travel. Southwest airlines need to create customer loyalty so as to be able to be guaranteed of steady demand for their services. This can be achieved through provision of above standard customer service, increasing the number of travel destinations as well as timely flights for the clients. To keep the clients motivated, Southwest Airlines needs to expand its point reward system so as to enable all the clients who use the airline to be able to acquire points even from a single flight. This will in return increase the number of new clients and encourage repeat clients. Staff welfare Employee satisfaction is vital to the achievement and success of any business. A high rate of employee happiness and job satisfaction is straight forwardly identified with a lower turnover rate. While this is a surely understood truth in management practices, financial downturns may cause the management to ignore it. Employee state of mind regularly mirrors the moral of the organization. In order to offer proper customer service, cheerful employees are amazingly vital on the grounds that they are the image of Southwest Airlines to the public. Job satisfaction, be that as it may, is not connected singularly to pay. Managers can likewise support office festivals for occasions and birthdays. The image of Southwest airlines can further be improved by encouraging out of office employee socialization. A good case scenario would see employees of Southwest airlines engage in volunteer projects. This will give employees a chance to create connections outside of the workplace while advancing the image of Southwest Airlines in a positive manner. The decision to avoid staff lay off at all cost motivates the staff and gives them a sense of job security. This in turn increases the productivity of the staff as they feel they are valued. This should continue even in future since it promotes production. Competition Competitors may come in distinctive shapes and sizes, with the same aim of acquiring market dominance. As much as Southwest Airlines may be quick to respond to key competitors with their great income, client base and force, smaller competitors can really represent a greater danger. According to Alderighi, Cento, Nijkamp & Rietveld (2012), big companies may be limited by their own processes, however new businesses are agile, can move quickly and work under the radar. Southwest Airlines faces most threat from new developments or developing competitors than by known competitors. Southwest Airways should focus on recognizing shifts in business sector fragments that cause supply gaps and afterward filling in those gaps while growing them to market stronghold. To manage competitor organizations, Southwest Airlines need to outline a knowledge framework to recognize parameters which will help in breaking down the opposition. Information acquired should be broken down and sent to suitable managers for decision making. This information will play a major role in setting up Southwest Airlines marketing strategy. Southwest Airlines should also grow its product range so as to target the rich and wealthy clients by offering prestige products. This product can be introduced in small scale and increased subject to demand. Fuel prices According to Turner & Lim (2015), Plane fuel represents a large part of passenger airlines working expenses, and carriers profits are vulnerable to swings in the cost of plane fuel. Unpredictable fuel prices continue to pose a greater challenge for Southwest Airlines future planning. Southwest Airlines officials realize that it is regularly difficult to pass higher fuel costs on to travelers by raising ticket costs because of the exceptionally focused nature of the business. Since huge aerial transports rival each other on the majority of the courses they serve, they have little energy to bring prices up because of higher fuel costs. Fuel hedging continues to offer Southwest Airlines with a platform to operate effectively without the worries of fluctuating fuel prices. This is a practice that needs to be adhered to even in the future so as to reduce the risks associated with unpredictable fuel prices. Customer Satisfaction Customer satisfaction is the main driver of consumer loyalty. Requesting that clients rate their fulfillment on a scale of 1-10 is a decent approach to check whether they will get to be repeat clients or even supporters. Listening is vital to viable customer service and it can likewise help support Southwest Airlines benefit. South west Airline needs to keep in mind key selling points for the organization and customer service objectives wherever it has its presence. This implies both online and offline. Like never before, online networking is an orderly piece of Southwest Airlines customer service model, so Southwest Airlines needs to adopt the use of digital platforms and social media like Facebook, Twitter, Yelp, among others to make sure they are effectively tuning in, captivating, observing and reacting to their clients on the web. Technology According to Thompson & Gamble (2014), Southwest airlines introduced satellite powered internet access to their Boeing airplanes in the year 2013. This is a selling point for the company since clients can be able to work on the internet while travelling in Southwest Airlines. The introduction of satellite television also increased client motivation to use the services since it increased the level and variety of entertainment while travelling on air. Southwest Airlines needs to focus on being always updated on new technology. Technology is ever changing and it can be a tool of competition if used in the proper manner. The use of online booking also reduced the costs involved from customers making bookings through the many travel brokers. This also reduced the time implications of booking a flight. Repairs and maintenance The use of one type of planes by Southwest airline has played a major role in ensuring that the maintenance costs are manageable. These has also made it faster for the company to be able to minimize the time needed to conduct repairs since the staff who maintain the planes have specialized on the type of plane and are better placed to operate effectively. Southwest Airlines should consider purchasing newer passenger planes to serve their clients and replace the old planes. This process can take a long period to complete but beginning the project on a small scale will mean the company is heading to the right direction. Acquisition of new planes will mean less purchase of spare parts and will also lead to a reduction in maintenance costs. This will in turn increase the profit of the company substantially. International service According to Thompson & Gamble (2014), Southwest Airlines introduced international marketing in January 2014. This comes with many opportunities and challenges as well. The fact that Southwest airlines will start operating in very new fields means that a lot of resources will have to be deployed to ensure success in the operations route chosen. Thorough evaluation of the new markets needs to be conducted in all potential operations routes. This will be necessitated by the need to utilize resources where there stands to be potential growth with a high potential for return on capital. Southwest airlines should ensure that it only enter the market where it can grow and increase its revenue. There is also need to expand to other international markets and not just the Caribbean. This will enable Southwest Airlines to grow and apply the best practice it has acquired from operating domestic flights in the international market. Marketing and advertising Marketing should be a continuous process for Southwest Airlines if it wants to be the most outstanding company in future. According to Firat (2006), numerous business still depend on customary, old fashioned, outbound advertising techniques for promoting, while numerous others have participated of the emotional movement to electronic marketing. With such sensational changes occurring in the realm of marketing and advertising, theres one thing that dependably continues through to the end; the motivation behind marketing. In todays computerized and Internet age, Southwest Airlines’ image will be molded by the substance Southwest Airlines and its workers highlight on the web and in addition the cooperation between the organization and its customers or prospects. Given the sensational customer move in the previous decade, the best method for increasing brand visibility now comprises of making use of advanced platforms like websites, eBooks, and press discharges, to completely enhance the presence of the organization in the realm of social networking and connecting with its adherents and other pertinent prospects. Positioning high in web search tools and keeping up an in number online networking vicinity are the two most essential parts of raising brand visibility. References Turner, P., & Lim, S. (2015). Hedging jet fuel price risk: The case of U.S. passenger airlines Journal of Air Transport Management, 44-45, and 54-64 doi:10.1016/j.jairtraman.2015.02.007 Thompson, A., & Gamble, J. (2014) Southwest Airlines in 2014: Culture, Values, and Operating Practices. Firat, A. (2006). Theoretical and philosophical implications of postmodern debates: some challenges to modern marketing. Marketing Theory, 6(2), 123-162 doi: 10.1177/1470593106063981 Alderighi, M., Cento, A., Nijkamp, P., & Rietveld, P. (2012) Competition in the European aviation market: the entry of low-cost airlines Journal of Transport Geography, 24, 223-233 doi:10.1016/j.jtrangeo.2012.02.008 Read More