Southwest Airlines Strategic Audit
The airline deals in passenger and freight air transportation services through its flights. It is the third largest airline in the US and the largest airline in North America having flight services to almost 100 destinations around the US. The airline began from a small business venture since its inception and grew to become one of the largest local airline in the US by the number of travelers carried annually. The airlines low pricing strategy and oriented customer care package has fostered competition among other airlines and achieved an upper hand in handling and maintaining their customers. The company specializes in Boeing 737s planes which are simple to maintain explaining the high daily flights to the scheduled destinations. However, this was not the case for the last quarter of 2017 were sales were $4.
7 billion having increased by 3. 9% from the preceding year. C. Strategic Posture The airlines present mission, approaches, social aims and guidelines are clearly stated in the website by the airline and also through the timely released reports and financial statements. Corporate Governance A. Board of Directors Southwest is comprised of 11 directors who form the board. In addition, two designations for honorary positions which include the Emeritus President Colleen C. Barrett together with the Chairman of Emeritus Herbert D. Kelleher. Brooks has been in the board since 2010 having vast experience in restaurant management for more than 30 years. William H. Cunningham is well educated being a PhD holder. He has served the board from 2000 and he is well vested in corporate governance of the organization.
Nancy B. It is the top management that fosters good working relationship of between the employees and the executive top through proper corporate culture which includes policies and good behaviors by the top management, aiming and achieving the company goals through guiding workers to attaining set targets and proper asset management to ensure smooth flow of work. III. External environment: Opportunities and Threats (SWOT) A. Societal Environment Economic: Oil prices have been a challenge to many companies in the airline industry. Southwest airlines expenditure costs Includes quite a higher fuel pricing allocation for each financial year despite the fact of maintaining the fares low. Technological advancements have enabled the airline to develop its website system enhancing the issuing of tickets to offer tickets to passengers.
However, most of the passengers opt to shop the prices through comparing from the agents. This makes the prices of the airline not to be available to the agents making it hard for customers to know the prices of southwest airline even though it has the lowest prices. (Threat). Political-legal: Terrorist attacks have become a major challenge to the airline industry southwest airlines included. During these periods, most people do not see he need to travel and waste their money however much the flight charges are low. People rather save the little they have to take care of some more essential and basic expenditure. The case has been the same for southwest airlines as it affects the whole industry (threat). Environmental concern has been a major focus for southwest airlines.
The company has shown efforts to conserve the environment through the various processes it undertakes. a. Threat of new entrants (Low): The airline business requires large amounts of capital to venture in and operate. The barrier to entry in this industry is high and therefore the threat of a new entrant remains to be low. Penetrating the industry is a bit difficult considering the low fares by southwest airlines. Also, new entrants keep off the industry because of the strict regulations on airlines, the high amount of taxes paid and strict government policies regarding the same making threat of entry low. This gives them a bargaining advantage for the prices and for what they produce. Additionally, the prices of crude oil have also made the prices of jet oil to increases thus making the prices for air services to go up proportionally by the same margin to recover the costs and make profit.
The prices charged from the suppliers influence the pricing decisions made by southwest airlines. e. Rivalry among competing firms (High) There are many airlines offering air services in the industry of which create rivalry in terms of decision making to establish themselves in the market and get the market share. The board of management handles the company’s running including allocation and approval of funds for various tasks, coordinating issues pertaining the managing of the company and playing a supervisory role all with the aim of achieving the company’s objective. The board of southwest is comprised of well-established top leadership who play a role in influencing the employees towards the achievement of the company’s vision and mission. In terms of market, Southwest’s target market is more based locally but with the acquisition of AirTran, the airline is having plans for expanding to cater for passengers globally.
All these is achieved by a strong team of employees who are committed o work and deliver. Southwest airline has a high regard to its employees and the company has a policy of employing workers fairly without bias. When southwest acquired AirTran, it rolled out a Programme to integrate its values to the employees of AirTran. This is justification that the company takes consideration of the values of culture of places it operates to enable provision of best services and in return maximize revenues. C. Corporate Resources 1. Marketing The marketing strategy for southwest airline is to provide the lowest charges for high quality customer care services. Market analysis enables the company to make decisions regarding the firm which impact the company.
With the latest venturing into the global space, business will boom and returns will be higher in the near future. Marketing provides a competitive advantage of the company over the rest because it through marketing that firms are able to capture and retain its customers. Southwest’s marketing based on low pricing aspect gives it a unique strategy in business and enables the company to have many customers which forms the company’s revenues. The managers incorporate every detail of contribution from the workforce and customers and it is through some of the suggestions given that they are able to implement in regards to segmentation of the market, markets research and creating product portfolios. Operations and Logistics Southwest airline utilizes the most efficient logistics and operational facilities.
There are no delays in flights take offs and changeovers and this is a plus compared to the other airlines. Operations and logistics are incorporated in the company’s budgetary allocation since it is consistent with the missions, objectives and policies of Southwest airline. Human Resources Management (HRM) The employees are Southwest’s important assets since they are the link between the top management, company objectives and the customers. Despite the fact that nearly all the employees belong to a union, southwest is determined to value them and treat them as shareholders. Analysis of Strategic Factors (SWOT) A. Situational Analysis Strengths Good implementation of airline vision Southwest looks at its vision statement as an opportunity because it gives a drive to its employees to feel satisfied and are well encouraged to deliver and give the best services to its customers.
With the integrity and high ethical values instilled through the corporate culture, the company is guaranteed to achieve the best. Larger market stake in north America Based in north America where most of its activities take place, Southwest airline has formed a larger customer base hence having a larger market share in the region. The high number of customers provide consistent stream of revenue boosting the company’s profits and growth. Opportunities Global development Southwest is committed to its course of providing flight services to its customers beyond the borders. The company acquired AirTran and this means taking flight business to the global space. This will create the opportunity of getting more returns from penetrating new markets. Vigorous marketing Southwest company has embarked on a strategy to advertise more in order to get new customers and retain the existing ones.
This is just a way to curb competition from rival airlines and retain its market share in the industry. Review of Missions and Objectives Southwest is dedicated to providing the best passenger services by providing cheapest fares. With these, the company has well laid out strategies to where it wants to get with time. Customer priority has enabled the company to be the best and get high returns. By expanding to global scale, the company creates opportunities for its employees. This increases the profits while maintaining the company’s objectives as being a low-cost airline. VIII. Evaluation and Control. With the advanced website and technological innovations for the company, it is easy for the company to monitor and evaluate its performance on the different segments.
It gives the company absolute control of the business from timely customer’s feedback, from the employee’s suggestions. The company can also project future trends of the business using the past and current performance. H. , & Bamber, G. J. High-and low-road strategies for competing on costs and their implications for employment relations: international studies in the airline industry. The International Journal of Human Resource Management, 21(2), 165-179. Routledge. Morrell, P. Airlines within airlines: An analysis of US network airline responses to Low Cost Carriers. Journal of Air Transport Management, 11(5), 303-312. Mudde, P. 31 Better fleet management to the various destinations has enabled the airline achieve due to the efficiency. Implementation of the company vison 0. 602 Southwest’s employee’s value the company’s vision and work towards making it a reality.
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