Strategic Management Process, Vision, Goals, and Objectives - Term Paper Example

?Introduction The assignment analyzes the vision, mission, values goals and strategies of Southwest Airlines. Southwest is a low-cost and low passenger fare domestic carrier in US who was at its most successive times in 2003 (Southwest Annual Report, 2011). The company had revenues of around $102 million with market cap of almost $1.5 billion. The company used the combination of low-cost along with differentiation as its primary strategy. Within a span of 6 years from its incorporation, it became the 11th largest airline company globally (Southwest Annual Report, 2011). The success of the Southwest was definitely attributed to a number of success factors that ranged from successful implementation of strategies to coming up with innovations in fares, routes and strategies ahead of its competitors. Analysis The mission of Southwest Airlines is “dedication towards the highest quality of the customer service delivered with the sense of warmth, friendliness, individual pride, as well as company spirit” (Southwest Mission & Vision, 2012). The goal of Southwest Airlines is to be the number one low-cost and low passenger fare domestic carrier in US. It currently provides services to nearly 62 cities in the United States. Southwest’s vision for the sustainable future is considered as one where there would be a high balance within its business model between Employees as well as the Community, the Environment, along with its Financial Viability (Southwest Mission & Vision, 2012). Southwest has primarily targeted “undeserved markets and large metropolitan areas” which usually carried high average fares in case of all airlines. The company also decided on providing point-to point service, by targeting unattended markets and by not flying to major hubs. Southwest had a short as well as long haul flight schedules which covered major cities of the United States. IN terms of advertising and publicity, Southwest Airlines primarily relied on word of mouth publicity for executing its innovative strategies. The company being a low cost carrier offered a wide choice to its customers in terms of fare combinations for stimulating the demand. The fares of Southwest were almost 65% less, with the average compared to that of its competitors. The company also stressed on using the online ticketing and making internet reservations thereby stressing on ticketless reservations. “Southwest offered fares which were 30 to 40% lower for booking s made 14 days, 7 days and 3 days advance and its walk-up purchase fares were 60 to 70% lower than that of its competitors” (Southwest Annual Report, 2011). The company being a net entrant had developed a low-cost structure for its operation. This also gave it the advantage of operating with the fleet of latest aircrafts. Fuel efficient Airbus A320 was used primarily for its operation by Southwest. This also helped the company in terms of lower retraining costs, maintenance of better spare, parts inventory as well as lower maintenance costs. All these advantages were reaped by Southwest by using standard Airbus aircraft. The company also relied on innovative techniques for cutting costs and offering more value to its customers. In terms of service, Southwest had around 1100 call center operators that worked from their home thereby giving additional advantage to the company for cutting infrastructural and other office expenses. The company’s primary focus remained on the routes that were heavily traveled by customers which were mainly along the New York-West Coast. For increasing its cost-competitiveness in the industry, the company entered smaller market thereby shifting its strategy in apprehension of providing customized service. The company also relented on innovative techniques like online bag checking counters and self-service bag drop counters at airport. The company displayed a perfect case of how a small player in the market takes advantages of combinational strategies to become a large player. The company’s advantages are sustainable for future, though new threats and high competition continues to derive the industry towards perfect marketplace. The major threat of low-cost service of the company remains the fluctuations in crude oil prices and threat of new entrants in the arena. The important elements of the Southwest strategy, some of those are a reflection of various constraints that the company had faced early periods of its existence, which included various things that the company did not do. The best example of this is that the company did not employ the hub-and-spoke route system that had been adopted by many other airlines within the same segment. These spoke systems were designed to feed large volumes of passengers into hubs where they could be redistributed to the connecting flights, all of those were intended towards increasing the average load factors (available seats utilized) as well as revenues per available seat of the miles flown. However, these were considered as very less convenient for passengers who primarily preferred point-to-point flying. Also, they exacerbated the “domino effect” that one late flight could have on several others. Just as important, they were more costly to staff because of the extreme peaks and valleys in the traffic through each hub at “connect” times, an effect that also increased crowding and confusion for connecting passengers. Also, Southwest Airlines is employing Best cost provider strategy by acquisition of Air Tran Airways. The company has purchased Air Tran Airways with the purpose of expanding into new geographic regions and thereby extending its low fare model. By this they are aggressively expanding into new markets despite sluggish demand for air travel. By this they have expanded on their product portfolio and now can cater to larger pool of customers. The competitive advantage of Southwest Airlines primarily comes from being the fact that it is a low-cost leader in the low-fare provider airlines industry in the US. The primary reason for the company to align to its vision and mission by being the low-cost leader in the US Airline industry is the reason that the company do not over-promise of their deliverables and this has become one of the primary strengths of the company in recent past. Southwest Airlines is not known for assigning seats for its customers, nor does is serves the meals. Also, the company does not have any first-class section in its flights. Some of the flyers do consider this as a part of customer service and do not like to fly without these being offered. So the main strength of the company had been regarding not making any false commitments to its customers. Southwest Airlines delivers what it commits to them. Since the Southwest Airlines as well as other low-cost carriers are comparatively smaller, they usually tend to fly on the shorter routes along with operating highly simpler route systems, which leads to the reduction in their exposure towards problems that usually cause delays in flights, mishandled bags as well as customer complaints. These airlines do not have much of the presence in the highly congested airports, thereby lessening towards their chances of developing the fore-mentioned problems. Southwest is considered to have scored highly above average on these types of the customer service surveys that were done by the Transportation Department. Conclusion The paper discussed the strategies, mission, vision and goals of Southwest Airlines. Over the last thirty years, Southwest Airlines has been very successful and continues to grow and develop. Southwest Airlines in the past have highly managed towards staying ahead of its competitions by implementation of the new products as well as services into the Airlines industry. The company has also seems to have maintained its mission and vision for offering its customers with the lowest fares possible along with doing a profitable business. References Alkhafaji, A. F. (1995). Competitive Global Management. Prentice Hall. Michael A. Hitt, R. D. (2008). Strategic management: concept and cases. South-Western Pub. (2011). Southwest Annual Report. Southwest Mission & Vision. (2012). Retrieved Apr 22, 2012, from www.southwestonereport.com: http://www.southwestonereport.com/mission-vision.php Read More