Crafting and Executing Strategy

Sample #2

Southwest Airlines began operations in 1971 flying between three Texas cities – Houston, San Antonio and Dallas. Southwest introduced the theory of low-fare flying offering $20 one-way flights. These low fares attracted businessman and leisure travelers alike, slowly skyrocketing Southwest into success. A SWOT analysis will be conducted, as well as an action plan for continued growth and development.

Strengths

· Focus on safety with Chief Executive Officer (CEO) Gary Kelly stating their objective for Southwest was “to be the safest, most efficient, and most reliable airline in the world” (Thompson, Peteraf, Gamble & Strickland, 2012, p. C-306).

· Industry leading employee productivity with a turnaround time of 25 to 30 minutes on an industry average of 45 minutes (Thompson et al., 2012).

· Southwest is a company focused on having a strong culture and one where the employee comes first rather than the customer.

· Relationship with union representation

· Internal advancement with 80 to 90 percent of supervisory positions being filled with internal applicants (Thompson et al., 2012).

· Focus on training with each specific job requiring a certain number of training hours, many above FAA standards.

· Operating on only one aircraft the Boeing-737. This minimizes training costs and keeps the need for spare parts for various planes down to a minimum.

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Weaknesses

· 82% of Southwest’s employees are members of a union (Thompson et al., 2012).

· Flights are only within the United States.

· Southwest does not offer the perks that other airlines offer such as member lounges and upgraded seating.

· Purchase of tickets is only available directly through Southwest via phone or internet.

· Southwest flies only a select number of airplanes limiting the number of passengers that can be carried.

· Putting the employee over the customer could make the customer feel less valued.

Opportunities

· Flights to more cities

· International flight

· Closer look at overselling and mishandled baggage. Southwest ranks second out of the 8 leading Airlines with mishandled and third in overselling their airplanes.

· Baggage transfers are not available for flyers with connecting flights.

Threats

· Rival airlines trying to offer similar deals.

· Increased fuel prices potentially deterring customers

· Decline in air travel due to fear of flying post-911

Action Plan:

· The Research & Development team should begin looking at popular international markets. Through research on top travel destinations and average number of flyers Southwest can alternate the number of flights available to different international hubs based on peak travel times.

· Continue to focus on “Living the Southwest Way” through continued personal development and training.

· Begin offering baggage transfers to individuals with connecting flights. Traveling can be stressful, by offering to transfer customer bags to connecting flights Southwest would help reduce some of the stress travelers feel with making a connecting flight. To achieve this Southwest would have to partner with other airlines, building industry relationships.

The management at Southwest has done a great job building the company into one that is successful. Based on the findings in this case Southwest would receive a ‘B’ rating. While their corporate culture is one to be applauded and is apparent with having some of the lowest turnover rates in the airline industry; Southwest still fails to deliver on the full customer experience.

One area in which Southwest should look at is the way in which they board their planes. Thompson et al. (2012) compared the boarding process of Southwest to that of a “cattle-call”. This is something that needs to be looked at throughout the airline industry, but for Southwest the use of colored paddles and letters on boarding passes give the customer a degrading feeling. With their innovative way of thinking and ability to go where their competitors don’t the team at Southwest could make boarding a plane as fun as waiting for one.

ReferenceThompson, A., Peteraf, M., Strickland, A., & Gamble, J. (2012). Crafting and Executing Strategy; The Quest for Competitive Advantage: Concepts and Cases, 18ed. New York, NY: McGraw-Hill Irwin.