...I. Company background Southwest Airlines is one of the US based major air carrier based out of Dallas Texas where it commenced operations on June 18, 1971. It was founded by Rollin King and Herb Kelleher got together and decided to start a "different kind of airline”. " They began with one simple notion: If you get your passengers to their destinations when they want to get there, on time, at the lowest possible fares, and make darn sure they have a good time doing it, people will fly your airline" (1). Southwest started with three Boeing 737 aircrafts with focus of serving mainly three cities in the state of Texas; Houston, San Antonio and Dallas. By summer of 1993 Southwest already became the 7th largest airline in the US. Today Southwest operated more than 3,400 flights a day serving 93 destinations across the US and five other countries in the Americas with over 665 aircrafts in its fleets. Southwest strategy is clear and simple, it’s a three headed monster strategy that focuses on, short-haul, high -frequency and low-cost. The NYSE symbol for the company is LUV, which indicated the home of the company at the Dallas Love Field airport and the theme of the cordial relationship created and maintained between Southwest employees and its customer. On Jan 22nd 2014, CEO and chairman of the board announced a record annual income of $1.1 billion or $1.64 per diluted share which is 20 cent higher than the industry average return per share during the same period. This...
Words: 2632 - Pages: 11
...ecological turmoil in the past two decades. This turmoil has brought to the fore the challenges being faced by the Aviation Industry in the world which have, in most cases, led to decreased profitability, lower growth rates, safety concerns and employee lay-offs among others. However, in-spite of the above mentioned challenges in the industry, Southwest Airlines has emerged as one of the most creative, most price competitive, safe, innovative and flexible company in the industry. The company has overcome unsurmountable challenges to become what is perceived today as a successful model of excellence in the industry with an extraordinary safety record in the last 40 years. In its forty-three years of service, the Dallas-based Airline continues to differentiate itself from other carriers with exemplary customer service delivered by nearly 46,000 employees to more than 100 million customers annually. It is also known for its triple bottom line approach that takes into account the Carrier's performance and productivity, the importance of its people and the communities it serves, and its commitment to efficiency and the planet. Southwest Airlines has shareholder-value through capital efficiency which is targeted at 15...
Words: 3971 - Pages: 16
...Assignment 2: Diversification Strategies “The Secret of Southwest Airlines’ Success” BUS 508, Contemporary Business Determine how Southwest Airlines’ corporate culture differs from other airlines: From the time Herb Kelleher co-founded Southwest Airlines in 1971 his goal was to establish a company that cared about its employees, who would in turn care about and service the needs of their customers with pride. Southwest has created a fun-loving work environment that rewards and appreciates unique personalities and how they can enhance the customer service experience of their patrons. This is refreshing in today’s market and the main difference between Southwest and other airlines. The mission of Southwest Airlines is to ensure satisfaction of their internal as well as their external customers. The external, of course, being the traveler and the employee is viewed as an internal customer. Externally, Southwest focuses on customer service, delivered with “a sense of warmth, friendliness, individual pride, and company spirit.” Customer service is number one (#1) for this airline. It is displayed in their every movement. The airline’s president, Collen Barrett is quoted as saying, “Southwest likes to think of itself as a customer service organization that happens to fly airplanes.”(Smith, 2004) The airline is dedicated to their customers. When other airlines felt the economy crunch and decided to start charging customers to check bags, Southwest refused to add a charge...
Words: 1274 - Pages: 6
...The Effect of Consumer Behavior on Southwest Airline’s Market Strategies Southwest Airlines provides flight transportation to leisure travel and business travel clients. While they specifically cater to each of these areas of segmentation, Southwest Airlines organizationally competes on a low cost strategy. The company’s approach to the market is to provide a low cost option to both consumer segments, while providing top-notch service and convenience. Southwest’s strategy targets business class travelers, making corporate partnership agreements a large part of their marketing and finance strategy. In catering to the business class bargain hunter, Southwest has established a value concept of customer loyalty and convenient services. Southwest has been able to capitalize this market segment to become the largest domestic airline while also able to maintain the highest customer satisfaction level in the industry. The company is able to maintain partnerships and brand themselves as an affordable business travel option by providing discount partnerships with affiliate businesses. This allows the airline to maintain market share by providing financial motivations for its business partners to incentivize them to continue to patronize Southwest Airlines. They actively promote their schedule of frequent non-stop flights to major city hubs as well as surrounding cities, proving to be a practical option for business class travelers. Southwest’s business traveler value concept extends...
Words: 2197 - Pages: 9
...Discovery of Southwest Airlines Jacqueline L. Gholar GM543-01(1505D) Organizational Diagnosis and Design August 25, 2015 Professor Rebecca Herman Rebecca Herman, Ph.D., MBA, BS. Milestone One Analysis: Business Case and Discovery of Southwest Airlines Introduction Southwest Airlines has a complex organizational structure comprised of several multi-divisional structures. These structures are constructed on increasing horizontal and vertical differentiation, as well as customer relations as a service driven business (Dearinger, R., 2010). Southwest’s business strategy from its launch in 1971 encompassed four core competencies, which are; “the lowest operating costs per plane; an economical point-to-point airport network; a fanatical culture focused on customer service and cost savings, and an ability to keep planes in the air more of the time than its competitors” (Heller, I., 2008). For the past 40 plus years Southwest has exceedingly accomplished these competencies and strategies within a very competitive market, and has outstandingly been recognized as a low cost provider in airfare with frequent service domestically. In 2014, Southwest chose to integrate international flights in its business strategy. In an effort to identify issues and develop solutions for this new integration, clarifying strategic priorities and providing the company’s strengths and weaknesses will aid in supporting the use of the Strategy Canvas Tool. Equally important, the strategy tool will...
Words: 1245 - Pages: 5
...BAM 1st Intake UMSD38 Strategic Management What is Strategy? Introduction Before we look into the above topic, we always need to question ourselves on why do we need strategy? To answer this question, we have to look into the values that organizations seek to create for their group of consumers. We will also look into how values are created and managed. Competition, an ongoing and endless journey for all organizations. Marketers got to constantly look out the market trend and changes as every action taken by or within the industry or any external factors will contribute a significant impact to each and every companies within the country, region or internationally. Companies will need to need understand and analyze on how to be proactive and reactive to such situations and best plan on how to respond and remain competitive or even better than what others are doing. However, many companies now constantly benchmarked themselves with competitors and outsourcing to strengthen their productivity, quality and speed as it is now a key fundamental to gain efficiencies to stay ahead of the competition. Never do the organizations and companies aware that the path way is leading to a mutually destructive competition. In today competitive world, different marketing strategy has been used by organizations and companies over the past thirty years. Throughout this discussion, we will also look into the different types of strategies adopted by different companies & organizations as...
Words: 1811 - Pages: 8
...organizations. This paper discusses those advantages and competitive strategies meant to improve innovation and the sustainability both domestically and globally. An explanation and estimation of how these strategies will affect sustainability of long-term performance and an explanation of the impact of the global market on Riordan’s business strategy concludes the paper. Competitive Advantage Every organization can establish some type of competitive advantage. Recent research about the competitive advantages of FedEx, Southwest, Toyota, McCain Foods, and Cargill assists in identifying Riordan’s competitive advantage. The first step in creating a competitive advantage is creating a mission statement and developing a strategic plan. Firms that operate with a strategic plan develop a focus and tend to have everyone in the organization aligned. Introducing unique core products or services leads to the establishment of a competitive advantage. In the case of FedEx, the core service is transporting products from one point to another. McCain Foods core service is processing potatoes. Both these organizations provide these services in a unique manner that differentiates them from their competitors through the use of information technology. Another potential advantage of these organizations is a focus on employee development. All of these companies, especially Southwest Airlines, recognize that...
Words: 1001 - Pages: 5
...STRATEGY AND PLANNING This week’s Management class discussion has been on Strategic planning in organizations. This paper will explain 3 types of goals, which are important to an organization as we as explanations and elements involved in created strategy of an organization. Organizations are built with the goal of the profitability through process in mind. The organization control approach incorporates goals and strategy used to reach them. (Boundless.com Jul 2015) Using their mission statements, top managers do strategic planning to determine what the organization long-term goals should be for the next 1-5 years with the resources they expect to have available. Strategic management is a level of managerial activity bellowing setting goals and above tactics. (Boundless.com 2015). Strategic management provides overall direct to an enterprise. Strategic planning requires visionary and directional thinking. It should communicate general and profit goals and ways to achieve them. Strategic management provides overall direction to the enterprise. Objectives are determined by the results of the strategic assessment. These objectives should run parallel on a timeline, some short-term and others long-term. (Kincki & Williams 2015) Tactical Planning’s by done by middle management, they are normally given a 6-25 month time frame. The strategic priorities and policies are passed down to middle managers that determine what contribution their departments or similar work...
Words: 1198 - Pages: 5
...Historically, all of RLC’s shipments move from each production facility to all major US markets via daily direct air shipments. The data provided to this consulting team indicates that RLC’s customers are all located in the Southwestern United States, which means that their Midwestern production facilities are geographically distant from their customers; this distance issue means that RLC is not operating efficiently because their shipping is not cost effective. Please see Exhibit A, which indicates that the total cost of air shipping based on current demand levels is $10,515 per day. Transportation costs make up a majority of RLC’s distribution costs, and will be used in this study as the basis for evaluating alternative distribution system strategies. RLC’s goals are to (1) reduce transportation costs, (2) reduce transit time to minimize the risk of lost sales, and (3) improve overall customer service. To meet these goals, this consulting team ran multiple scenarios aimed at optimizing the supply chain. RLC has already made strides to improve their distribution system, but are currently challenged as to how to make additional enhancements. Their “desire for a distribution system characterized by high-speed transportation and low in-transit inventory levels” has driven them toward improvements such as reducing/removing lag time from their order cycle (including order processing), removing warehousing facilities from the equation to reduce holding costs on inventory and lower...
Words: 1160 - Pages: 5
...supply firms, and pharmaceutical companies (UOP, 2013). A competitive advantage allows companies to increase sales, resources, and market share. Team B’s analysis will provide insight on Riordan’s competitive advantages by identifying competitive strategies, competitive sustainability, and the effect of the global market changes to the company’s business strategy. Riordan’s Competitive Advantages Every organization must establish some type of competitive advantage. The recent research of FedEx, Southwest, and McCain Foods’ competitive advantages assists in identifying Riordan’s competitive advantage. The first step in competitive advantage is creating a mission statement and developing a strategic plan. Firms that operate with a strategic plan develop focus and alignment. Introducing unique products or services leads to the establishment of a competitive advantage. In the case of FedEx, the core service is transporting products. McCain Foods core service is processing potatoes. Both organizations provide services in a unique manner that differentiates them from the competition through the use of information technology. Another potential advantage of these organizations is employee development. All of these companies, especially Southwest Airlines, recognize that their biggest asset is their...
Words: 1108 - Pages: 5
...that there was a difference between operational effectiveness. Operational effectiveness measures competency and how well a company outperforms its rivals, but a large part of strategy implements evolution and differentiating amongst competitors. As Michael E. Porter states, “A company can outperform rivals only if it can establish a difference that it can preserve” (Porter 2010, p. 3). In addition, a great deal of strategic positioning is to know the market and deliver the needs of demands. For example, Southwest provides a first come first serve seating and allows its customers to check in 2 bags for free, while Spirit Airlines have the lowest deals in most flights, but charges their customers a fee for any carry on bags or checked in luggage. American Airlines and affiliates offer wifi and complimentary drinks on flights and JetBlue has Direct TV for its customers. I use these examples because I travel back and forth from California and Oregon, and have observed these features on many airlines. I find it very applicable to the topic of strategy. Each and every airline has its distinguishable features as incentives for customers to choose them over their rivalries. My perception of strategy has evolved in that I have applied many of the previous discussions we have had in the past with strategy and effective implementation. I find it hard to successfully carry forth strategic planning and success within a company without great leadership, management and an understanding...
Words: 532 - Pages: 3
...potential by stifling innovative thinking. There are other theorists that state that listening to closely to markets and strategies can create a barrier to commercialising new technology and lead to reduced competitiveness. (Ferrell and Lukas 2000). In order to truly understand and analyse whether innovative thinking is being constrained by strategic planning systems, it is essential to understand which strategic planning systems are being used, whether their implementation limits the allowance to new and different approaches to organisations, and whether companies in real-life are being affected by this constraint. Before analysing whether innovative thinking is oppressed by strategic planning systems, it is important to define what a strategic planning system is. According to the BNET Business Dictionary (2007), strategic analysis is ‘…the process of conducting research on the business environment within which an organisation operates and on the organisation itself, in order to formulate strategy’. There are many different tools and analytical methods that are used by companies but there are three main types of analyses: the SWOT Analysis, the PESTLE Analysis, and the Porter’s Five Forces Model. Most companies use these strategic planning systems in order to analyse the information regarding markets and before making any major business decisions. It is these strategies that make a company successful but it can also hinder a company’s ability to be creative and innovative in a time...
Words: 1745 - Pages: 7
...Stance •They focus on executing shaping strategy and using technology changes to create new business ecosystems Example : Google’s Ad Sense WHAT IS A SHAPING STRATEGY? • A shaping strategy is no less than an effort to broadly redefine the terms of competition for a market sector through a positive, galvanizing message that promises benefits to all who adopt the new terms • Example: Bill Gates in early 1980s. (mainframes to desktop machines). • Strategies can be of two forms: – – Disruptive innovation Mergers & Acquisition driven DISRUPTIVE INNOVATION • In simple terms disruptive innovation helps – create a new market – goes on to disrupt an existing market – displaces an earlier technology • Innovations that improve a product or service in ways that the market does not expect, by designing for a different set of consumers in the new market and later by lowering prices in the existing market. – Example: Dell and Southwest Airlines DIGITAL INFRASTRUCTURE • Unlike the other technical (disruptive) innovations like steam engine, electricity which stabilized after businesses harnessed their potential, digital infrastructure is constantly improving • New powerful enabling infrastructure. • Provides potential for small actions and investments to make an impact disproportionate to their size. • Favors new entrants over incumbents RETHINKING THE SUBSTANCE OF STRATEGY • Convention wisdom holds adaptation as the best strategy in case of absence of equilibrium • Success...
Words: 1544 - Pages: 7
...With respect to the case study Southwest Airlines in 2008 what are the key policies, procedures, operating practices, and core values underlying Southwest's efforts to implement and execute its low-cost/no frills strategy? Which of Southwest's strategy execution approaches and operating practices do you believe have been most crucial in accounting for the success that Southwest has enjoyed in executing its strategy? Southwest airlines have a number of key policies, practices and core values that enable them to effectively execute their strategy. Most importantly, the airlines focus on its people and culture along with a focus on the core values of LUV and fun creates an environment in which employees can effectively implement the strategy. The family type culture and approach to recruiting employees with the right attitude ensures a low turnover for the company and an attitude that fosters employees helping out wherever they are needed is a great example of cross-functional systems enabling strategy implementation as identified by Beer (2000). The strategy of gradually expanding into new geographic markets and adding flights to areas where other providers were cutting back have helped ensure Southwest achieves high levels of market saturation in its current markets. Combined with curtailing flights on marginally profitable routes these strategies have enabled Southwest to gain better productivity from their fleet of aircraft. Strategies focusing on low operational cost...
Words: 382 - Pages: 2
...sure you have a strategy? Donald C. Hambrick and James W, Fredrickson Executive Overview After more than 30 years of hard thinking about strategy, consultants and scholars have provided an abundance of /rameworks for analyzing strategic situations. Missing, however, has been any guidance as to v^hat the product of these tools should be—or virhat actually constitutes a strategy. Strategy has become a catchall term used to mean whatever one wants it to mean. Executives now talk about their "service strategy," their "branding strategy," their "acquisition strategy," or whatever kind of strategy that is on their mind at a particular moment. But strategists—whether they are CEOs of established firms, division presidents, or entrepreneurs—must have a strategy, an integrated, overarching concept of how the business will achieve its objectives. If a business must have a single, unified strategy, then it must necessarily have parts. What are those parts? We present a framework for strategy design, arguing that a strategy has five elements, providing answers to five questions—arenas: where will we be active? vehicles: how will we get there? differentiators: how will we win in the marketplace? staging: what will be our speed and sequence of moves? economic logic: how will we obtain our returns? Our article develops and illustrates these domains of choice, particularly emphasizing how essential it is that they form a unified whole. Consider these statements of strategy drawn from actual...
Words: 7729 - Pages: 31
