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... base their model on the motto, which states that "if they " re happy, satisfied, dedicated, and energetic, they " ll take real good care of the customers. When the customers are happy, they come back. And that makes the shareholders happy, " Southwest has very good relations with all their employees. Employees are either of independent unions or have flexible contracts which allow employees to work longer hours. Southwest Airlines, however, is not without weaknesses.
No matter how successful, Southwest Airlines serves only 29 states and cannot compete against the bigger companies that serve nationally or even internationally. Furthermore, Southwest Airlines does not utilize a hub system that allows for bigger competitors to reach further out. Such competitors are aware that they cannot match Southwest Airline's prices; their market is larger and is not feasible to offer cheaper tickets at the cost of no in-flight meals. Instead, competitors narrow the price difference between Southwest Airlines and themselves and stress on the quality of these frills (such as roomier seats). Others, through use of flight hubs, are the only ones who can economically serve remote customers. Another weakness of Southwest Airlines is their preference of Boeing 737 s.
Being limited to one type of airplane leaves them with little flexibility when the model receives a bad reputation or a critical flaw is discovered. Such would be a costly venture for this company, who " ve used only one type of airplane and in the face of a dire situation would face a costly venture of finding replacements or counteracting bad publicity. Southwest Airlines's unless is primarily because they have focused sharply on their goals. This is evident by their no-frills, low-cost model: their goal is to provide the cheapest form of short air travel between two cities; providing the bare necessities. Driven by the idea that customers can be satisfied without having expensive options available for them, Southwest Airlines have stepped on the toes of many of its bigger competitors. Southwest Airlines was able to differentiate themselves from their competitors by offering the lowest prices.
This appealed to many people who were not impressed with the additional services such as in-flight meals or wanted to avoid busy airports. Coupled with the utilization of the internet, Southwest Airlines almost became a trend, a sort of an underground hit, bypassing travel agents and their fees. Southwest Airlines provided a medium in which city-to-city transportation was possible with the lowest costs. Part of their success is due to their focused group; Southwest Airlines serves only 29 states - a substantially smaller portion of geography, when compared to those who serve customers coast-to-coast.
While the company was able to enjoy their success in the earlier years, recent events and poor economic conditions have made competition fierce. Now, the bigger companies are trying to emulate Southwest Airline's style. By narrowing the price gap, the luxurious services previously deemed too expensive has become more affordable. A possible drawback is that because Southwest Airlines's tragedy has proven so effective, it will be duplicated and emulated by its competitors to a point where it would lose the originality.
This could result in competitors offering low rates to the areas covered by Southwest and beyond, making Southwest Airlines' range and limitations more obvious. It would be very possible in the near future where a big company, with its hubs (something Southwest does NOT have), basically introducing Southwest Airlines' low-cost model to a wider market, encroaching and outdoing Southwest Airlines. When a comparatively small, new company is able to take on major players in an extremely competitive industry, gain market share, please customers and employees alike, it is time for others to take notice. We will initially evaluate Southwest Airline's competitive business strategy of their maintenance of a low cost and exceedingly reliable service approach (forgoing perks such as meal service, first-class preference and assigned seating), as a major transportation corporation.
We will ultimately make supplementary recommendations and improvements based on the stratagem of their already flourishing company. As a company that still faces continuous growing challenges before them, it is essential for Southwest Airlines to expand on their existing achievements. Our analysis and promising suggestions will be developed with intent to better serve customers by improving their routing system, offering enhanced accessibility and minimizing delays. As business consultants, we anticipate to pave the way of one of the leading travel industries into becoming the best of the best.
Recommendations: Southwest Airlines were able to operate their business relatively undisturbed. It was only in the poor economic conditions that suddenly Southwest Airlines' method of operation became the ideal model for its competitors. While the publicity is beneficial in raising employee morale, and raising stock prices; Southwest Airlines is now target of competitors' focus. A tactic that Southwest Airlines can do to inflict damage to competitors is to slash prices.
This type of tactic is typical of a big company that has a monopolistic rule in an industry squeezing other competitors. This tactic is advisable when competitors are near bankruptcy or are in dire situations. Because competitors cannot match Southwest Airlines' prices, the most they can do is narrow the gap of the price difference. Southwest Airlines, which has consistently made a positive profit, can increase the price gap by lowering their prices.
Southwest Airlines will incur losses from this move, but the goal of this move is to drag the competitors further into debt. Because this move affects both companies, this move is very risky and should not be done unless Southwest Airlines is sure that their competitor is near bankruptcy. Possible reasons for this move would be to eliminate the weakest competitor in the industry, which would free up the market held by that company. The reason for the creation of Southwest Airlines started when its founders saw an opportunity. Frequent trips between cities were exploited by providing a quicker form of transportation.
Southwest Airlines has weathered through several crisis and has proven itself to have potential for to be a leader of its industry. The poor economic conditions has placed many airline companies in debt, while Southwest Airlines was able to make a profit. With its competitors weakened, Southwest can take the initiative and expand-not foolishly, but with the same drive and precise execution the company was founded under. The genius behind Southwest Airlines's unless is location; and if researched properly, this can be applied to other areas.
The appeal of Southwest Airline is the cheap tickets, as they offer none of the luxuries (such as in-flight meals). Southwest Airlines' no frills approach may not be pleasing to all, it would be good for Southwest to make a few changes in which the aesthetics would be more accommodating. Upgrading seats may be a costly venture, but it would open Southwest Airlines to a larger market. The medium of choice for customer referral is the internet. Internet referrals have been the main source of customers (it further cut costs by charging a lesser fee to book seats through the internet than through a travel sales agent). With the saturation of discount websites, however, Southwest Airlines is losing the grip it held advertising on the internet.
More websites offer competitive rates and special discounts-which if Southwest Airlines does not take immediate action can end up losing customers. Since advertising through the internet is risky, as people hate pop-ups or spam e-mails, it is our general consensus that Southwest should find ways to be listed on these price comparison websites. Before, there weren't many sites that offered price comparison and finding deals was difficult. With these sites, information is available at the fingertips of the web surfers who can make better informed choices.
Southwest Airlines should ensure that their voice is heard through this medium, as it is sure to attract people in search of deals. Conclusion First and foremost, Southwest Airline has developed a great low cost model for the past thirty year that fits today's economy the best. It has expanded from a tiny company with merely three aircrafts to one of today's major airliners that flies between 58 cities carrying over 60 million customers each year. As everyone can see, Southwest Airline has been a big success.
Now, it is given an opportunity to grow even bigger at this extremely hard and critical time for the airline industry. After the incident of September 11, Southwest Airline is one of the few airliners that remained profitable; other airline companies are losing millions of dollars due to the insurance raise, the security cost and lack of customers. We recommend Southwest airline to take this opportunity to expand to greater regions. It is the time for Southwest airline to use its low price tickets to drive its competitors out of business and take over their market. We believe, giving up some of the profit to cut the ticket price even lower and upgrade hardware can open Southwest Airline to a much larger market that will bring more profit in future. Implementations of cost saving technology such as internet is needed to lower the operation cost to give customers better deals.
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Research essay sample on Southwest Airlines Airline Companies
