Strategic Planning (Southwest Airlines) - Essay Example

Strategic management has been defined by Meyer as “the process by which managers understand organisational goals; examining the future threats to, and opportunities for, an organisation; identifying strategies for dealing with these threats and opportunities; ensure organisational capability to implement these strategies; and continually monitoring the entire process to provide direction and support for accomplishing the strategic management objectives” (Tyndall, et al., 1990, p.9). The strategic management practices of Southwest airline have been discussed in the later part of this project.

Strategic planning Southwest Airline has its unique business model that has been planned after considering the corporate strategy and business environment. The company has a strategic planning committee whose members possess an in-depth understanding of different functional activities. These members are responsible for analysing the business environment in the local market. They also use different business reports to analyse the core competency of the business. On basis of the strengths, weaknesses, opportunities and threats, this committee formulates the business strategy for Southwest Airline.

The activity system formulated by the strategic planning committee is as follows: Figure 1: Southwest Airlines’ Activity system (Source: Hitt, Ireland & Hoskisson, 2009, p.104) The above given plan resents the factors like low profit margin, attraction and retention of local passengers, point to point routes and limits customer services. These are some of the core strategies on which whole of the Southwest Airline’s business model is based. Strategic implementation The responsibility of the strategic planning committee does not end only by formulating the strategies; it is also responsible for implementing these strategies.

As for example, to achieve the strategy of limited passenger services, the management under guidance of the planning committee has listed out the process to active this goal. The company decided not to offer free meals, no baggage transfer facility, just 15 minutes for gate turnaround and limited use to travel agents. All these actions assist the company to achieve the objective of low customer service. The company’s vision statement reflects that Southwest Airline is highly focused on its employee base.

The strategic planning committee has planned to enhance productivity of the employees. For this the company is implemented higher play structure for the work force. Flexible union contracts have been developed to meet specific requirement of the employees. The company also offers high level of employee stock ownership. All this is done to motivate the employees as this will not just enhance their performance but will also reduce the employee turnover rate. Again, the company has identified business travellers as the target customer group because this group travels t a higher rate and prefer to go by low cot airline.

With time the size of their customer group will increase and it will assist the airline to expand its market share. Strategic control The process of strategic management often fails in spite of a well developed strategic plan and a successful implementation process. This is because often the company fails to control the change introduced in the business process for long run. As a result, whole of the capital and the managerial time