Strategic Management at Southwest Airline Company - Essay Example

? MGT599 - Strategic Management, Mod 4 Case Assignment Executive Summary The Southwest Airline Company is a domestic carrier which provides quality services at quite low fares. The company commands great popularity among the segments where it operates. It is found to pursue the cost leadership strategy for building competitiveness as well as to improve the performance. In accordance with the SWOT analysis, the cost leadership strategy has been learnt to possess few weaknesses as well as threats which needs to be overcome for ensuring future growth. The company should formulate plans for spreading out its business in more segments to enhance profits as well as attain better recognition. It should adopt such strategies which will help it in developing the business in accordance with the prevailing market conditions. The strategies will aid the company to retain more customers as well as provide improved quality services. Introduction Southwest Airlines is identified to be a carrier company in the United States of America which is known for its cheap fares. Headquarter of the airline company is learnt to be located in Dallas, Texas. It operates over 3,300 flights each day as well as engages over 37,000 employees in the company. It provides its services in almost 37 states. The company is famous for its cheap fares as well as quality services provided to the customers (Southwest Airlines, 2012). The company follows the strategy of offering efficient services to the customers at a cheap rate. It operates with a cost leadership strategy which enables the company to offer better services to its customers. Thesis Statement The purpose of this paper is to bring out the strategy adopted by the company for enhancing its profits as well as services. It will also help in comprehending the strategic choices that will further develop the performance of the company. Main Body The airline company practices the strategy of cost leadership which signifies that it provides quality carrier services at an economical rate. It aids the company in competing with its contenders in terms of low prices as well as the degree of quality of the provided services. The low or affordable fares facilitate the company to attain a competitive edge and maintain a dominant position in the industry in comparison to its competitors. This strategy also assists the company in earning more profits (BCIT School of Business faculty, n.d.). A SWOT analysis will be conducted to gain a comprehension regarding the effectiveness of cost leadership strategy with regard to the company. The SWOT analysis will aid in understanding the core competency of the strategy which has been primarily adopted for raising the degree of performance of the concerned company as well as for increasing its profits. Strengths: The airline company provides quality services at an affordable price which helps it to improve the performance as well as profits. This particular strategy makes it possible for the company to attain competitive advantage against its competitors. It is supposed to be quite a popular airline carrier in the relevant industry (Shahzad Trading & Consulting FZE, n.d.). Weaknesses: The company offers its services at reasonable prices which restrict it from developing innovative ideas with regard to improving its performance. In order to maintain low cost benefits, the company would require making investments on a continuous basis (Shahzad Trading & Consulting FZE, n.d.). Opportunities: Cost leadership acts as a vital opportunity for the company as it helps in earning increased profits and offer quality services. This strategy has aided the company in retaining increased customers as well as ensuring business growth (Shahzad Trading & Consulting FZE, n.d.). Threats: The cost leadership strategy adopted by the company may pose a threat by reducing the competitiveness of the company in comparison to the brand loyalty and recognition of its competitors. The company is also likely to face greater degree of threats from other airline companies which are also known to be focusing on maintaining reasonable fares along with providing quality services (Shahzad Trading & Consulting FZE, n.d.). The above conducted SWOT analysis assisted to ascertain the strengths, weaknesses, opportunities as well as threats of the cost leadership strategy adopted by the company. It was found that the performance was enhanced as a result of the strategy but few threats as well as weaknesses the company were also identified which are required to be focused on in order to overcome them for the enhancement of performance as well as profits. The strategic choices refer to the plans that are to be formulated for augmenting the productivity and profits of the company with regard to its services. The three levels of strategic choices are functional as well as global along with corporate level strategies. Functional level strategies: Southwest Airlines is believed to be functioning in an efficient manner with the help of its cost leadership strategy which has enhanced its profits as well as quality in relation to its services in the airline industry of the US. The company has acquired a huge number of customers as it offers quality services at affordable fares or prices. The quality and nature of the offered services have helped the company to retain increased customers for its growth as well as development. It needs to expand its business as well as develop modern carrier services to compete with the other existing contenders (National Kaohsiung Marine University Copyright, 2012). Business level strategy: The company was initially developed as a domestic carrier and became quite popular among the customers with the US segment. However, it was also observed that the company also earned a reputation of being a globally recognized airline industry. The company should target more segments of the country for providing its services as well as undertake steps for the reason of providing international flights. The commencement of international flight services would help the company to attain a global recognition as well as create a well known brand in the world. The company needs to engage global growth as well as development for becoming a global brand along with increasing its profits (National Kaohsiung Marine University Copyright, 2012). Corporate level strategy: The company should broaden its segment of operation in order to improve the profits as well as competitiveness. It has been known to acquire Air Tran airlines for providing services in the coastal areas of North America. It should also adopt different generic strategies in accordance with the market conditions to accomplish its motive of providing excellent services at affordable prices (National Kaohsiung Marine University Copyright, 2012). The company needs to develop strategies which will help in expanding its services in numerous segments for earning increased profits. It may witness a greater degree of competition in future which will result in inefficient performance for the reason of just concentrating on one generic strategy of cost leadership. It needs to devise plans as well as choose a number of strategies for its survival in the recent competitive environment. It should also exploit the available opportunities as well as strengths by way of expanding its services to more segments and providing better carrier facilities to the customers (Creative Industries Research Institute, 2008). Conclusion The Southwest Airline company commenced as a domestic carrier which had earned an excellent reputation within the airline industry of the US. The company, chiefly aims at offering better quality services, at affordable prices. It was learnt to successfully accomplish its objective of serving its customers with quality services. It followed the cost leadership strategy which helped it in retaining more customers as well as in attaining a competitive position against the competitors in the industry. However, it requires developing other strategies for the enhancement of operation in more segments to sustain as well as create a brand loyalty within the customers. The company also needs to formulate plans as well as policies for its future growth and prosperity. It should additionally follow other generic strategies along with the cost leadership strategy for attaining growth as well as ensuring profitability. Therefore, the company should formulate plans for maintaining its competitive advantage as well as performance in the airline industry. References BCIT School of Business faculty. (n.d.). Michael Porter’s “generic strategies”. Retrieved from http://faculty.bcitbusiness.ca/kevinw/4800/Bobs_porter_notes.pdf Creative Industries Research Institute. (2008). S.W.O.T. analysis. Retrieved from http://www.ciri.org.nz/downloads/SWOT%20Analysis.pdf National Kaohsiung Marine University Copyright. (2012). Strategy analysis and choice. Strategic Management, pp. 1-24. Southwest Airlines. (2012). Southwest airlines and AirTran airways confirm plans to maintain AirTran airways operations at 22 domestic and international airports. Retrieved from http://swamedia.com/releases/0a8e6c60-a120-4ede-816a-acb3cb03193e Shahzad Trading & Consulting FZE. (n.d). SWOT & TOWS analysis. Retrieved from http://www.shahzadtc.com/pdf/SWOTTOWS.pdf Read More