southwest airlines

Identify Current Strategy

Southwest Airlines Co. is a major domestic air carrier that is “the world’s only short-haul, high-frequency, low-fare, point-to-point carrier” according to the President and CEO Herb Kelleher. Southwest has always been able to quickly seize any strategic opportunities whenever they arise. Southwest is the only company to ever hold the Triple Crown for annual performance. Some of the key factors that contribute to Southwest’s success are its conservative growth pattern, cost-containment policy and the commitment of its employees. Southwest has made its mark by concentrating on flying large numbers of passengers on high frequency, short hops at bargain fares. Southwest flies out of smaller satellite fields rather than major congested airports as they generate a higher turnover rate in the process. Deviating from their conservative strategy a little bit, they are introducing longer, nonstop trips as well as coast-to-coast travel.

Southwest continues to be the least expensive airline in the industry, as competition cannot meet the fares that Southwest is putting out into the market. The competition of competing airlines would incur substantial losses if they stayed competitive with Southwest’s fares. Another key factor is that they have only one type of airplane that is used, Boeing 737’s, which helps lower their costs dramatically for training, maintenance and inventory.

While most airlines have turnaround times of up to an hour due to congested airports and cleaning services, Southwest does it all in 20 minutes or less, recognizing that planes only earn money while they are in the air. Southwest has a great team spirit as they believe that the employees come before the customers as they are given great amounts of information to better understand the company, its mission, customers and its competition as information is power and with information is a better job being done. They maintain a lean staff as they have negotiated flexible work rules that enabled it to meet rapid turnaround schedules as everyone helps everyone out with their high productivity. Southwest always sets itself apart from the rest of the industry as they have a fun loving, rebel reputation. Their ads always try to convince the customer that what the airline offers is of real value to them. Southwest promises safe, reliable, frequent, low-cost air transportation t...

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...a source to profit.

Develop Specific Strategic Recommendations

I think that Southwest should expand their markets but not to an extreme as I wouldn’t want them to deviate too much from their very successful strategy. I would like to see them expand their markets to Mexico especially as I feel that they can generate high revenues due to their low fares that cannot be beat as well as their high turnover rates that would give them a greater competitive edge against competing markets. The possible issuance of more common stock might help generate more revenue as well as their company name is growing in popularity, as they are one of the more admired companies around. In issuing common stock, Southwest could use the equity to expand into other markets and would make an impact in the airline industry even more then they have already. Customer needs are very important with business, as they cannot be forgotten about. With the employees being #1 within Southwest for some consumers that may not be enough to get their business. Southwest should look towards pleasing the customer in other ways as it may grab their business as well.