Southwest’s Competititve Advantage

dodge IMPLEMENTATION AND MEASUREMENT METRICS ASSIGNMENT-1 southwesterly AIRLINES CASE STUDY QUESTIONS 1. How does southwest Air funds invite its agonistic favor? 2. How does southwest Airlines run a appearance its dodging? 1. How does southwest Airlines let its warlike hold dear? souwest Airlines uses a exist Leadership Strategy, however most legal injury strategists would agree that having a broken impairment does non, in itself, constitute a warlike advantage. In fact, depending that first-class honours degree prices be always a honest strategy for competition is deeply misguided.However, at times, channelizeing low prices can lead to a strategicalal focus which forgos tremendous results. Modern competitive strategy for pull often regard firms from a resource-based view. According to this lens, competitive advantage derives from leveraging an inimit competent resource to deliver value at a frown apostrophize than the competitors. Price is a entire ly imitable resource. Any familiarity can the Tempter the prices of its competitor if it so chooses. Hence, arguing that a low price is a strategic resource, or that it leads to a competitive advantage in and of itself, is illogical.sou-west Airlines has used the target determine and utilized a marketing taste since its infancy in 1971, even though these concepts were non fully defined affirm then. set-back, starting with the clients and the value they sought, souwest Airlines initial target was guests traveling surrounded by cities in Texas, specifically in the midst of Dallas and Houston, Dallas and San Antonio, San Antonio and Houston. While Texas is voluminous than many countries, it isnt so large that people cant front from city to city.Hence initially, the most comparable utility(a) to sou-west, and therefore its prime competition, wasnt separate air passages. Instead, it was the car. In uncovering the car as the competing alternative, south-west was able to overly discover the target price of its offering. Second, to compete with the car, southwesterly Airlines had to price their profit relatively akin(predicate) to the toll of car travel. With this target in mind, they chose $20. While $20 is cut than the organization allowable tax deduction for travel, it is overly significantly laid-backer than the price of bobble alone to drive in the midst of these cities.Thus, at this $20 price, southwestward Airlines could be confident that it would capture many of the travelers that would experience operate and convert them into short-hop air travelers. Third, the product was redefined to dish out customers at this low price profitably. see what was removed from air travel and what was include instead. The table below enumerates the secern accuses Points 1 Removed Reduced reservations flexibility Reservations mainly do layly Southwest Airlines as they eschewed working with travel agents.No connections between airways So uthwest Airlines would non transfer baggage between dodgings. Included or Added Simplicity in Pricing Flat rate of $20 per leg of the journey. Also reduced the cost of price management, as no establish management system was needed initially. higher(prenominal) whatchamacallit in terms of on-time arrivals With a simplified fight route between slighter used airports, Southwest was able to operate much(prenominal)(prenominal) reliably. Higher convenience in course frequency With point to point flights, Southwest could offer proceeds between Houston and Dallas with the same plane come up-nigh each 2. hours. 2 3 No long-haul flights Southwest Airlines customers could notwithstanding waste Southwest between a city-pair, not crosswise the country or even crosswise state lines initially. This greatly reduced cost of compliance with CAB rulings, as Southwests operations were not airfield to interstate commerce rulings. 4 No in-flight meals Southwest Airlines simply offered pe anuts and beverages. Fun lucky flight attendants provided jokes, costumes, and make flying at rest with warm and caring service. Faster boarding times leading to faster flight turnarounds.More set With one pattern of service, Southwest Airlines could put 137 empennages in a 737 versus 128 in a United Airlines 737. 5 6 No seat assignments First come, first seated. No first class One-class service. 7 Does not fly into study airports or uses Use of underutilized airports that be less major airports concentrates on point slopped to metropolitan cities reduced to point connections costs, promptitude Use of multiple aircraft showcases Frequent aviator program does not use miles establish Uses fuel efficient 737s reduces maintenance and fosterage costs Based on design of trips flown reduced operating costs 9 From this list, we see a number of items which an airline would usually use to define master value removed from Southwest Airlines offer. A Southwest customer couldnt be treated to first class, couldnt get food, couldnt sacred scripture them as sort of a larger trip, couldnt book with them through and through an agent, and couldnt even preselect their seat. all(prenominal) of these features were exactly what defined a competitive airline at the time. And, all of these features added cost.Instead, Southwest Airlines selected a specific target customer a Texan traveling between cities in Texas and then determined what it would take to satisfy that customer. ? ? ? That customer was far more interested in travel talent than travel class. That customer would be sunny to forgo a meal, especially in counterchange for a friendly flight attendant and a Dr. Pepper. That customer was employment off driving for flying, and needed flexibility in booking rather than navigating through the decisions and planning related to yield management.This service described does not meet the postulates of e rattling customer that could have flown Southwest Airli nes, moreover it does describe those of the target customer. And, given the alternative of mediocrely self-colored everyone at a high cost or highly satisfying a select few at a low but utile price, Southwest Airlines rightly chose the latter. As a result of tightly defining the value sought by customers (efficient and flexible travel), and the price ($20), Southwest was able to meet the needs and surpass the expectations of their target customer.Moreover, it was able to do this at a significantly lower cost than a standard airline. So can low prices deliver a competitive advantage? NO, not alone. only target pricing, where the price and benefits demanded by customer leads to a strategic focus that drives a re interpretation of the product and service, can deliver a winning competitive advantage. One where a customer need is met at a cost below the price the target market is willing to pay. BALANCED placard FOR SWA 2. How does Southwest Airlines execute its strategy?Southwest Airlines is probably one of the most middleman examples of a company that (a) Defined a very clear and straightforward unwrap seam purpose, (b) Chose the right vexation beat to support the line of reasoning purpose, and (c) Consistently demonstrates the marrow values and behaviors derived from that key ancestry purpose. The soil promise of Southwest Airlines is Dedication to the highest tincture of Customer Service delivered with a experience of warmth, friendliness, individual pride, and Company Spirit.Every single employee of the company is aligned with this brand promise and in spite of the current economic convulsion in the airline industrySouthwests performance isamong the beaver in the industry. Staff morale is exceptionally high. In 1971, Rollin King and Herb Kelleher started an airline service with one simple imagination If you get your passengers to their destinations when they want to get there, on time, at the terminal possible fares, and make darn sure th ey have a well time doing it, people will fly your airline.Southwest currently has the last-place operating-cost structure in the US national airline industry and consistently offers the lowest and most of all simplest fares. Southwest holds the scoop out cumulative customer satisfaction evince for the past 18 years. In declination 2008, the airline had 35,499 employees and generated total operating revenues of $11 billion (2007 = $ 9. 8 billion, 2001 = $ 5. 3 billion) from a passenger load factor of 71. 2% with a fleet of 537 Boeing 737s.Its stock exchange symbol is LUV, representing Southwests property at Dallas Love Field, as well as the theme of its employee and customer relationships. The major victor to their continued success seems ascribable to their low-cost model and competitors being certain that they cannot match Southwest Airlines low prices. Southwest Airlines has the reputation of being able to delineate a competitor into bankruptcy. It is believed, however, that it was not erect the choice of its pedigree model that made Southwest Airlines much(prenominal) a no-hit company it is the way they execute their transmission line model through perfect strategic alignment.Southwest Airlines succeeded in defining a very simple yet clear key caper purpose the fact that they school for being the only short haul, low fare, high frequency, point-to-point carrier in the States leaves very little room for interpretation. What makes Southwest Airlines key business purpose such a powerful one however, is not just the very clear definition of their raison d etre, but certainly as well as what the company and its leaders do with it.Their simple but effective key business purpose is the main guiding belief for Southwest Airlines strategic goals, business strategy, organisational infrastructure, and last but certainly not least their company culture. The organization of Southwest Airlines is best described as an upside-down pyramid an organiza tion very much in line with the way they want to do business. The upper management is at the bottom and supports the front line employees, who are the experts.Front line employees play a major role in the yearly business planning and operational budget which for a great part is done bottom-up rather than top-down. This is the fruit of co-founder Herb Kellehers unpredictable leadership style, in which management decisions are made by everyone in the organization, not just the head executives. The company does not put much emphasis on structure instead, employees are encouraged to think freely without constraints such as titles or official mandates. The reason for Southwest Airlines success is due to their clear key business purpose and outcome values, and due to the way in hich they consistently execute their business model (a combination of disruptive foundation and customer intimacy) in line with their key business purpose and core values. ? ? ? The Southwest Airlines fleet cons ists solely of Boeing 737s It offers only economy seats (there is no business or first class). Southwest Airlines also do not offer in-flight meals, only peanuts and other snacks. Southwest is simple and direct at the goal of their service A primarily short-haul airline that flies flat from city to city, with just one type of plane the Boeing 737 and the lowest costs.With a simple goal, Southwest has excised many of the luxuries that competitors offer, such as luxury seats this is made evident by their decision to perform a rule for passengers who cannot fit into the seats to purchase an additional seat. This rather unpopular move whereas other airlines would have suggested a more luxury class seat is simple in its purpose get passengers from point A to point B with a minimum of frills, but with a friendly smile and great individual(prenominal) service.While Southwest Airlines offer no frills, they do meet and exceed customer expectations when it comes to private service. T hey base their model on the motto If employees are intelligent, satisfied, dedicated, and energetic, theyll take real good care of the customers. When the customers are happy, they come back. And that makes the shareholders happy. Southwest invests in very good relations with all their employees. Employees are every of independent labor unions or have flexible contracts which allow employees to work longer hours (adapting the business model to the key business purpose)