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Strategic Management - Southwest airlines - Term Paper Example

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Southwest airlines has demonstrated its sound strategic management and planning by retaining its position as being the soul airline in the U.S industry that managed to rack up profits in the 1990’s while its competitors made huge losses…
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Strategic Management - Southwest airlines
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Download file to see previous pages The company’s success rests on the key pillars of value creation for its customers as well as employees. Of the entire strategic management, Southwest Airline’s key role in strategic human resource management has been an integral part. The company uses the words “LUV” and “FUN” to describe its relationship with employees as well as the deeper culture of the organization. Southwest believes in endowing employees with high respect as well as providing them with an environment that best supports their willingness to work. The company’s low turnover rates and high levels of productivity are indicators of its success.
Another significant aspect of the company’s strong strategic position is its management of organization’s capabilities and resources. In this process, part of the value that is created for employees is translated into value addition for the shareholders and customers. Southwest’s source of competitive advantage lies in its delivery of value for money which is a combination of low operational costs and superior levels of customer satisfaction and service. The company, hence, is a model of generation of value through people as suggested by Porter in his studies. Hence, the notion of strategic management at Southwest has been a product of several factors which are best explained as a cycle of events. Firstly, the company succeeds at value creation for its workers which translates to high levels of motivation. Secondly, the company uses the motivation produced by this in order to implement processes that reduce cost and enhance service. Third, the company succeeds at capturing value by offering both low cost and high levels of customer service better than its competitors....
Secondly, the company uses the motivation produced by this in order to implement processes that reduce cost and enhance service (Hallowell, 1996). Third, the company succeeds at capturing value by offering both low cost and high levels of customer service better than its competitors (Hallowell, 1996). The competitors of Southwest have been traditionally associated with hub and spoke networks that enhanced barriers to entry in the 1980’s along with advanced customer relationship management via segmentation and computerized systems (Hallowell, 1996). Research has suggested that mere “contestability” is not a sufficient condition for strategic management of airlines (Bailey, Graham, & Kaplan, 1986). Contestability is basically the failure of an airline to remain competitive at a particular route simply because there are no barriers to entry and its competitors can easily enter the route to capture the profits (Bailey, Graham, & Kaplan, 1986). The case of Southwest demonstrates that clearly the company needed a lot more than mere contestability in order to sustain its strategic advantage over the years. This leads to the premise that the high motivational levels of employees made a crucial role in the strategic management initiatives at Southwest. The company’s core target was to offer airline services at the lowest possible costs, even if that means competition with automobiles. The target customer of Southwest is typically a customer who wants warm, co operative staff as well as superior interaction, response all at a low fare. The aim is, therefore, to offer more for less money rather than less for less money. This has clearly differentiated Southwest from its ...Download file to see next pagesRead More
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