Case Study Southwest Airlines in 2013

Since the inception of the Southwest Airlines (SWA), their strategy for short-haul flights was based on low fares as evidenced by how their entry to the airline business was opposed by their major competitor airlines through lawsuits that SWA won then. SWA initial proposed destination and flight start airports was (and they should remain so in the future) less congested downtown airports closer to any city, as busy and congested opposed to major airports (e. g. Baltimore instead of Washington D. C. Above all, the company must value diversity and seek to create an environment that encourages it among their suppliers and the workplace. Low fares have been the selling point for the company and keeping it that way or better improving is quite important.

The company has had significant approaches to cost savings that include; unavailability of meal services, one type aircraft and manual reservation system among others. However, to ensure significant strides are made towards cost reduction, robust strategies need to be put in place (Paelo, 2016). The company does not charge for luggage, but it should consider doing so in the future to increase revenues and lower costs. Instead of passing costs to the customers, the airline should apportion the lowest expenses to the areas that would result in increased faces (Moreira, 2014). By investing in other revenue generation areas as a way of diversification can help absorb some of the operational costs. Lower costs would definitely increase customer experience and SWA would for sure be the preferred airline by most travelers.

The company can also leverage the economies of scale by expanding their business to other less saturated markets like Asia. The Asian market is considered to be an economic giant and profitable business partner by many business enterprises/ multi-national companies. The emerging markets of Africa and Asia are a major part of the world economy and will become even bigger in future. The American airline market is declining and has already become more saturated; the company should seek to implement low fare operations abroad. An international move that would expand Southwest’s market share and cost leadership in the coming years (Moreira, 2017). There are various key areas that the company can plan strategically to boost its expansion strategy. They include; 2. The company must, therefore, seek to invest substantial amounts in market research before opening operations in those areas.

Merge and buyout of smaller firms with international presence: Since SWA is a wholly American firm, it will be necessary to bring in new leadership with international experience from outside the country. These new leaders would have tremendous experience in startups or be quite familiar with economies and customers of other target countries (Thomas, 2006). The company would also seek to acquire smaller and established airlines in those countries. The company should also consider the acquisition of other company assets. It should then seek to confront the more superior markets of China and Japan in the hope of achieving at least 10% market share within a set period of time. To gain such market share will not be an easy task; the airline will need to invest more in research and development of the new markets (Thomas, 2006).

The results of their market research will then be tailored to the target markets. With an expansion in global markets, SWA would command a larger share. This would lead to economies of scale that will result in further cost reduction. SWA believes that hardworking, self-motivated staff, and friendly staff traverses cultural difference, and the same trend will be employed in the new markets in order to keep the SWA mantra of “hire on attitude and train for aptitude”. The result of the proposed strategy will likely be: By doing all of this the airline will have more customers and gaining more money because they can go to different markets. Citation / Reference (include on this page) 1. Moreira, M. An analytical model for the assessment of airline expansion strategies.