- Published: October 31, 2021
- Updated: October 31, 2021
- University / College: Southern Methodist University
- Language: English
- Downloads: 21
Strategic long or short term is the most important by the company are concentrated in industry or business to a chive competitive advantage. So, touched many scientists in this field and in doing, I will explain how the Southwest Airlines Co used its strategy and discuss the many theories in this area through focuseSouthwest Airlines has added appreciated information that can be hand-me-down for additional strategic planning from the firm’s SWOT analysis. The following diagram shows how SWOT analysis fits into strategic situation analysis.Southwest’s strengths of a firm operating strategy, strong of operations, and respect in the industry are what enabled the airline’s recovery from the new economic decline. The airline was able to activity opportunities through the recession by using its current strength’s. Strategies use a firm’s internal strength’s to take advantage of external opportunities one of the Southwest strategies that used was to range its firm operating strategy additional into the airfreight industry. Southwest operations have been successful in the historical with the passenger transference helping of the industry; so it was a very logical and low risk move to increase the operation strategy into the airfreight business. When the growth was whole, Southwest was able to proposal competitive low cost load transport she was equal to other business leading the airfreight business. The move offered southwest an increase in revenue that was necessary to continue profitable in wild economic times when passenger transport was severely falling. Southwest was able to use its credit as the top )low cost( airline in the industry to remember customers and improvement new customers in the face of powerful competition. Through the decline, many airlines were reducing prices and offering consumers contracts in order to continue afloat in the stressed airline industry. Southwest was already known or its low cost so many consumers either continued customers of the airline or switch over to Southwest in search of the lowest price.In order to understand the consequences of deregulation, it is important to examine Porter’s Five Forces as well as the influence of complements to the airline industry.The most important part in such identification is substitutability, both on the demand and supply sides. The reason overdue analyzing your organization’s industry is to figure out how you could be competitive and retain in market inside all commotions that occur in the business environment, such analysis could be seen through:Forecasting, is essential to planning for business success, estimating future business performance based on the actual results from prior periods, enable organizations to modify business functions on timely bases to meet set targets. This allows the business to avoid losses or major financial problems should some future results from functions do not conform to reasonable expectations. A forecasting process should bear in mind assembling a wide range of verifiable facts affecting your business and its past performance, such as: (Impervious sales levels, Average past selling costs ,Competition, Financial limits, Elasticity of demand ) .Strategies to alter industry structure. As hard as it appears to alter an industry’s structure, however organizations are frequently opposed with challenges and they change to adapt to these changes to improve the competitiveness compressions. When deciding to alter the organization’s structure, we should bear in mind; (Importance the factors that are producing the industry to lose profit, Study these factors and figure out its cooperation stages) (505W)Strategy can be seen as a broad, long range and far reaching plan of action designed to achieve particular goals, most often about winning and maintaining a fair market share in the business environment. Strategy is different from tactics or decisions with resources at hand; it is used to make the problems easier to solve and to understand the concepts more.Referring to the above mentioned description of strategy in Southwest Airlines, one could see that strategy could be seen as the preparations made before the battle, before the enemy in engaged, also about avoiding the battle and making combat unnecessary. It is as much as about destroying the enemy’s will to fight, and in case of combat, destroying the enemy in a fight. Therefore, focusing on the external industry characteristics versus the focusing on the internal dynamics and strategies of the Southwest Airlines would give us a clear view of how these two interact in the business environment where the external industry determines the firm strategy and performance and the internal dynamics determine the role of the Southwest Airlines specific resources and capabilities developed in an Southwest Airlines The outcome of such interaction would maintain an adequate market share for Southwest Airlines lasting within an unstable, continuous, dynamic environment in which Southwest Airlines exist. (Yu , 1998)Southwest Airlines strategy focuses on combining value creation and internal growth from existing operations with aggressive expansion into new geographies” To pursue this strategy Southwest Airlines is building on four strategic elements;
First, Mass market focus and segmented customer strategy:
Southwest Airlines is focusing on the mass market addressing at least 70% of the market – both in terms of subscribers as well as segment value. The subscriber growth will be generated through aggressively targeting under-penetrated segments, whereas value growth will come from the existing customer base.
Second, Competitive positioning and differentiation strategy:
Southwest Airlines is different and competitive. The differentiation approach is not price-only focused, but a combination of differentiated elements of their value proposition. Southwest Airlines competitiveness derives from the adoption of a fully segmented market approach.
Third, High-value technology strategy:
At Southwest Airlines they constantly explore latest technologies. Yet, they only invest in commercially viable wireless technologies that enable the provision of a full range of services that at the same time add value both internally and to end-customers. While using technology as one of the key enablers of differentiation, they ensure that innovation is not only technology driven, but also an internal philosophy adopted throughout the organization.
Last element , Company management strategy:
Southwest Airlines assume a people-oriented culture and organization where they promote collaboration among the Group, local operations and functional areas – aiming at synergy realization and excellence Southwest Airlines provides a merit-based working environment which rewards and empowers employees in line with their performance. will operate using Southwest Airlines’ strategies in a wider market that will greatly outdo the performance of Southwest Airlines. All of these would cause a great loss in the market share of Southwest Airlines and its lead in the airline industry.So, it is optional that Southwest Airlines should take full benefit of the financial stability and profitability to grow its operations by increasing its services to innovative parts, and the purchase of additional airplane and the growth of some of the services to make some changes to the aesthetics of the carrier would be more appropriate. Each of these might be expensive plans, but it will open the company to a higher market. This will help step to keep the current market southwest and quiet get more than that, and so keeping the leadership of the company, which would check the reality of them than followers. We look at the approval of such important for the company because if Southwest will stay just as it is, there may come a time when you will leave behind more advance and airlines that have the flexibility of a more active low-cost strategy.It is important for the company to increase some of their strategies to reply to what could be the possible changes in the situation around them. Also, in line with its task to offer “the highest quality of customer service,” and its believe that it is only likely to develop and promotion. (710W)Southwest Airlines is the nation’s fourth largest transporter in relations of client boarding’s. Southwest activated Customer Service on June 18, 1971 from three Boeing 737 airplane serving ) Houston, Dallas and San Antonio (. It has grown immensely since then and now operates over 350 Boeing 737 aircraft all over the United States. With the lowest operating cost structure in the domestic airline industry, Southwest provides primarily short-haul, high frequency, point-to-point, and the lowest and simplest fares. The airline serves 59 airports in 58 cities in 30 states. Southwest also retains one of the best overall Customer Service records. “Southwest’s core advantage is that they work more effectively, more flexibly and more productively.” 34,000 employees currently work for Southwest, which launches nearly 2,800 flights a day.The main objectives of Southwest’s business strategy include focusing on transporting high numbers of passengers on short trips with high frequency, providing low fares, making a strong commitment to its employees and customers, and aggressive marketing Southwest’s motto to “keep it cheap, and keep it simple,” has been a major factor in its success. In contrast to its major competitors, Southwest does not rely on a hub and spoke system, but rather concentrates on frequent point-to-point flights. Southwest Airlines’ second strategy is to offer their customers low fares. Southwest continues to be the least expensive airline in its market. Even when they tried to match Southwest’s cut-rate fares, the large carriers could not do so without incurring substantial losses.Southwest only offers snacks such as peanuts and drinks on its flights. The elimination of such frills reduces cost as well as airplanes non-productive turnaround time at gates. Its fleet of about 345 aircraft consists only of one type, the Boeing 737, which is more fuel-efficient than the larger airplanes. Keeping just one type of plane also helps reduce training costs of pilots and mechanics, and also requires lower inventory levels of spare parts. In addition, Southwest offers a ticket-less travel system to trim travel agents’ commissions and run its own reservation system. Significant portions of customers make reservations through its Web site. “The Online Sales Index, based on self-reported ticket sales data, represents the percentage of tickets sold from a specific airline’s Web site for 2001”.Those areas stand for developing markets for our products. It’s not only about chasing low cost or low price. Globalization is a big deal for supply chain executives, and Southwest to find ways of getting people who come to work for us exposed to global issues. “That need, which represents a major challenge, comprises a growing part of the supply chain executive’s job responsibilities. For example, you see that global markets are different. The infrastructure, customer supplies, and channels are all different.Multinational firms such as Southwest do not enjoy constant competitive advantage in terms of physical capital resources and human capital resources. They also have fewer patents than their international competitors. The multinational Southwest has embraced not only the standards they started to work on earlier, but also the Chinese domestic standard. However, Chinese firms have made the first step, and they are believed to make further steady steps in the near future.However, accumulating costly resources is not enough to support a sustainable competitive advantage (Teece, Pisano, and Shuen 1997), above all for Internet-based firms, where they could not afford making costly mistakes in wrongful commitment but have to be alert, flexible and adaptive. The ever-changing competitive Internet environments render seemingly sustainable competitive advantage obsolete. Instead, competitive advantages arise from a Southwest’s capability to constantly redeploy, reconfigure, rejuvenate, and renew its resources and capabilities in responding to the changing environmental conditions. For example to the Jupiter Airline CORE, Southwest is one of top airlines that scored the highest on online sales performance. These airlines are best at moving their customers to the online channel.Teece and Pisano (1994, p. 541) propose dynamic capability theory as the “subset of the competences/capabilities which allow the Southwest to create new products and processes and respond to changing market condition.” As a result, competitive advantages rest on distinctive processes, shaped by the firm’s asset positions and the evolutionary paths followed. (690W)Penrose discussed numerous factors affecting the Southwest’s ability to grow. For most southwest, their purpose is to generate profits. Profits are maximized when the Southwest allocates its resources efficiently and its processes are effective. As technology increases the speed that information travels, the sustainable competitive advantages of organizations will continue to last a shorter quantity of time. Unless steep barriers of entry exist, like large capital investments or the control of or access to scarce resources, the competitive advantages organizations take pleasure in will be for a shorter period of time.Teece (Teece, Pisano, and Shuen 1997) he say that A Southwest s overall strategy and board is to keep a dynamic fit among what the firms has to offer and what the environment dictates As such, a Southwest must possess dynamic capabilities so as to constantly reconfigure, renew, and redeploy its resources and capabilities to better capture and exploit the changing opportunitiesPenrose (Edith T. Penrose Estate, 1959) describes southwest as social organizations that produce products and services via planning administration and organizations whereas the traditional economic theory of firm growth considers mainly the quantity of input.Management tries to make the best use of the resources available, a really ‘dynamic’ interacting process occurs which encourages continuous growth but limits the rate of growth. In order to focus attention on the crucial role of a Southwest’s ‘inherited’ resources, the environment is treated, in the first instance, as an ‘image’ in the entrepreneur’s mind of the potential and restrictions with which he is confronted The theory of growth is developed first as a theory of internal growth, that is, of growth without merger and achievement. The significance of merger can best be appraised in the light of its effect on the process of and limits to internal growth. The emphasis of the analysis is then shifted from the internal resources of the firm to the impact of particular types of external conditions as firms grow larger and to the exacting situation of small as compared with large firms in the economy. This permits the development of an analysis of changes in the rate of growth of firms as they grow, and finally leads to a discussion of the process of industrial attention, which is, after all, primarily a question of the relative rates of growth of large and small firms in a changing economy.The ‘theory of the firm ‘as it was constructed for the purpose of assisting in the theoretical investigation of one of the central problems of economic analysis–the way in which prices and the allocation of resources among different uses are determined.In this context only those aspects of the behavior of Southwest are careful that are relevant to the problems that the wider theory is designed to solve. When the ‘theory of the firm’ is kept in its proper habitat there is not much difficulty with any of the explanations of the ‘size’ of firms.Difficulties arise when an attempt is made to get used to the theory to an alien environment and, in particular, to adapt it to the analysis of the expansion of the innovating, multiproduct, ‘flesh-and-blood’ organizations that businessmen call firms. It makes little difference in the theory of the firm whether changes in the characteristics of the individual firm, for example its managerial ability, or changes in the expectations of the entrepreneur about the future course of events, are treated as causing changes in the size of a single Southwest or as causing the creation of a series of ‘new firms’. The theorist is free to adopt the technique most suited to his problem. But how such changes are treated makes a great deal of difference to the theorist concerned with the growth of the firm defined, say, as an administrative organization in the real world.business strategy is the pattern of decisions in a Southwest that determines and reveals its objectives, purposes, or goals, produces the main policies and plans for achieving those goals, and defines the range of business the Southwest is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and noneconomic contribution it intends to make to its shareholders, employees, customers, and communities. In a Southwest of any size or diversity, ‘corporate strategy’ usually applies to the whole enterprise, as ‘business strategy,’ less comprehensive, defines the choice of product or service and market of individual businesses within the firm. (744W)Al-Jazeera Airlines; the Kuwait Rule allowed the creation of non-governmental airlines, really ending Kuwait’s 50-year old addiction on a single airline. “The 2004 established Jazeera Airways as first airline to enter this newly liberalized industry. Jazeera Airways is privileged to carry the national flag of Kuwait as the country’s new national airlines.” (http://www.cheapair.com.in/aljazeera.html)Today, Jazeera Airways is a Kuwait Public Shareholding Company with a capital of KD 10 million raised through an initial public offering in Kuwait that was oversubscribed 12 times. The airline is the first and only privately owned airline in Kuwait and the Middle East, and it has the pride of being the one and only private owned airlines in Kuwait and in the Middle East. Also this airway offers low cost airfares to the passengers.The external environment of the flying industry Al Jazeera at the stage of maturity with the slow pace of growth, which caused an increase in the level of the tournament. Only three services have a direct impact in the industry, which is the bargaining power of buyers and suppliers and the intensity of competition. Barriers to new entries that reduce the rising threats of any new arrivals. Some factors, such as economics, politics, social and technological impact on the industry by either increasing or decreasing passenger traffic. Companies use several key factors to expand their success to maintain a good position and increase the loyal customer base, such as differentiating their services, making strong brand name and implementation of the latest technologies and join alliances.As external environments, companies must identify the internal factors, and the strengths, weaknesses, opportunities and threats. Enables companies to improve and overcome weaknesses, and dealing with the opportunities and benefits and avoid threats. Al-Jazeera Airlines has a lot of strengths, such as judgment of other airlines, as it replies to new technology, such as electronic ticketing and self-selection services. Obvious weakness is the high prices Al-Jazeera as of the huge investments in aircraft demand. Although it has opportunities (investment near the airport in increased income and Kuwait per capita), many of the threats that relate to it, such as high oil prices, low cost airlines and the spread of deadly diseases. The following section provides a channel island with the best solution in order to be able to compete. The aviation industry is a huge market as there are 900 international airlines company with nearly 22,000 of the total aircraft, though, has low rates of growth as in the mature phase of the life cycle. (Economic and social benefits for the Air Transport Association).http://www.zawya.com/images/features/130311-Jazeera-01.gifFor any new entry aviation sector is to be unattractive, because the demand is low and strong competition and operating costs and increase. However, because of the Emirates and attractive strategy and market position creates a good defense against a rival. For example, established a strong brand name and customer loyalty in the market through the implementation of the latest technologies in services to be positioned as a leader in the field of aviation. It also achieves high profits annually as it brilliantly focuses on strengthening its position in the market by differentiating strategies that can be used to attract customers such as frequent flyer program.Also, it has a lot of opportunities to overcome all obstacles that may occur and affect the aviation industry such as political problems, economic, etc. It is also a member of the island, which enables the sharing of resources and reduces costs for the company, and thus leads the company to protect its market position. (Smith, R (2009)Overall, Al-Jazeera has a large market position in addition to that of the airline profitable which is measured as a competitive advantage, since it has the opportunity to compete and expand their business to earn higher profitsJazeera Airways adopts overall differentiation strategy to gain a competitive advantage among its competitors by offering high-quality services in order to be the best company in the market, and differentiates from its competitors. For example, Al-Jazeera was the first airline Airlines that offer television categories each plane.In addition, he has gained a competitive advantage by focusing on new market segments. For example, it provides other airlines such as Saudi Arabian Airlines with training courses using the latest machinery, aircraft simulator called to be the only company in the Middle East to offer this service. The aim of these changes is to be the leader in the industry by increasing the awareness of the brand name regionally and internationally, which will increase the demand and profit as well. (Gregory, A (2010)The island should reduce costs through operational improvements, which improve maintenance operations, and maintaining high airplane operation and continually force flying preparation. It can also be reduced through investment in technology supply channels to reduce labor costs. For example, it is optional to install more self-service at airports cabin of flying destinations from the island since the already installed at the airport in Kuwait. (824 W)In conclusion, I was described how the Southwest Airlines evolved and changed its strategy; So as not to lose, tackled through theories and how Jazeera Airways growing is best known through time. Therefore the success of the companies should take care of its strategy through administration, organization and planning of service or production by use of innovation and technological development.