Introduction
Southwest Airlines was launched with an aim of offering cheap, reliable and friendly flights to different destinations around the U.S. The company’s objective is to connect people to their crucial lives (About Southwest n. p.). Importantly, Southwest Airlines has grown to be one of the largest airline companies offering domestic flights in the United States. The acquisition of AirTran is a strategy that aims at expanding Southwest both in assets and international flights.
This paper analyzes the market position of Southwest by answering questions on the company’s culture, values, opportunities, challenges and acquisition of AirTran.
SWOT analysis of Southwest Airline
SWOT analysis is the critical examination of the internal and external aspects of business. According to Hm and Böhm (2), SWOT focuses on the strengths and weaknesses of an enterprise since they determine whether the business will prosper or fail. Additionally, SWOT identifies the opportunities and threats that face the particular business.
Strengths
Southwest Airlines has numerous strengths that allow it to be among the best flight companies in the U.S. Southwest has realized a fast growth both in the number of passengers and planes since its launch in 1971. The company provides credit to passengers based on how many times he/she has used the airline rather than the miles of flight (Southwest Airlines SWOT n. p.). Importantly, Southwest boasts of being among the first companies to provide ticketless flights. It has a strategy of offering affordable flights and high-quality services to customers. Additionally, Southwest empathizes on a good relationship between employees and the management.
Weakness
Southwest Airline faces several weaknesses that threaten its position in the industry. The company doesn’t provide segmented seating choices. The airline isn’t ideal for those who want to transport cargo since it has small space. Southwest orders its planes from Boeing and offers domestic flights only. It has few supervisors, which may cause a threat to the passengers. Further, it realizes minimal revenue opportunities since it hasn’t adopted unbundling like the other airlines (Southwest Airlines SWOT n. p.).
Opportunities
After the acquisition of AirTran, Southwest has many chances of growth. First, the company can expand into the international market (Reed and Jones n. p.). Second, the company can embark research to better customer services. Third, Southwest can employ current technologies to improve its operations by offering valuable services such as online booking. Finally, the company can include business class services to target a larger market.
Threats
The declining economy poses threats to Southwest; it may experience a decline in the number of passengers. Numerous companies in the industry heighten competition, especially firms that have introduced online booking (Martin n. p.). Southwest experiences additional operation cost due to government policies and maintenance of its planes.
Things that impresses me about Southwest Airlines
There are different aspects that I love about the Southwest Airlines particularly because it’s the largest domestic carrier in the United States. First, the company offers high-end services through its Boeing 737, which is among the most comfortable flights in the world (Mutzabaugh para. 1). Customers have a chance to fly in comfortable aircraft's unlike competitors who rely on small crafts. Second, I like the fact that the company has a low-cost strategy. Importantly, Southwest Airlines understands customer needs and seeks to offer services that are affordable to average citizens. Though the services are relatively cheaper, they are valuable and satisfying. Third, I like the fact that Southwest Airlines offers highly flexible services in a bid to meet customer needs. The management has made a decision to ease and improve scheduling by going for 737 to 800 (Mutzabaugh para. 6). The company seeks to reduce the cost of operation without transferring the cost of to the customers. Fourth, Southwest Airlines aim at eliminating services which are unnecessary to ensure customers get the best experience. Hence, the booking procedure is short, and the company only offers services which are of value to the customers.
How I would grade the Southwest Airlines management
I would give the Southwest Airline administration an A. Regarding points 1-10, I would give the company nine. The high grading is due to the strategic plan that the management has implemented to ensure continued growth while offering valuable cheap services. The company employs a credible Human Resource team that recruits trained and qualified airline staff. The employees are also monitored to ensure they provide top-notch services. Another strategy of the Southwest Airlines management is focusing on offering low-cost services while making profits. Also, the company shares with other airlines to ensure it stays relevant in the industry.
Further, the former CEO, Kelleher crafted strategies that aim at getting passengers from trains and cars growing the business in the domestic market (Lucier para 3). Over years, the number of cities served by Southwest Airlines has increased. Also, the company has realized growth in the number of passengers.
I like the strategy of Southwest Airlines since the company focuses on offering affordable transport across various cities across the U.S. Also, I like the fact that the company eliminates traffic by providing people with alternatives to trains and vehicles.
The strategy of Southwest Airlines is excellent. The history of Southwest Airlines shows how the company has grown its customer base and profits over the 38 years it has been in operation.
Main Policies, core values, and procedures of Southwest Airline
The primary policies of Southwest Airline are the low cost of operation and fares. Additionally, the company offers frequent flexible flights and serves many cities across the United States (About Southwest n. p.). The Southwest Airline enjoys affordable fuel since it has signed agreements with various fuel companies. Thus, the company is in a position to offer cheap flights to its customers and make huge profits.
The operating practices of Southwest Airline include efficient flights, affordable and high-quality customer services. Core values of the company include offering honest and valuable services to the passengers. The procedures of Southwest Airline that make it stand out in the flight industry include online booking. The company has also introduced electronic ticketing to ensure convince in operation (About Southwest n. p.). Teamwork and communication are other values that make the Southwest Airline a market leader in commercial flights. Above all, the company is keen to promote customer pride and keep loyal customers. The staff strives to fulfill its mission of ensuring company spirit and friendly services.
Southwest Airline culture
The company adheres to a culture that assures its employees and passengers are happy and satisfied. Customers choose their flights, and there are options for reserve or cancel flight (Cancel air reservation n. p.). It maintains a corporate culture and good reputation. Southwest Airline encourages teamwork and consultations among workers and customers. The company staff believes that if customers aren’t gratified the expected profit won’t be realized. One different aspect of the Southwest Airlines management is the emphasis on customer satisfaction rather than employee improvement.
Southwest Airline promotes exchange plans to make sure its workers understand what employees from other firms experience. Most importantly, the management doesn’t stay in idle; instead the managers monitor what is happening around the company.
However, the company may change its culture since Kelleher is no longer the CEO of Southwest Airlines. The company may train its staff to focus more on making profits and treat customers better. Hence, the company may face challenges maintaining the culture that it has built. The new CEO may not be well-suited to drive the already existing culture, but it’s sure the company will continue to prosper.
Grading on the most crucial operating strategies of Southwest Airline
If I were to grade the Southwest Airline management based on policy implementation, I would give them a B. If the grading system is 1-10, I would give them eight. My grading is due to the innovative way in which the company has formulated, implemented and executed its strategies. Southwest Airline policies are a success, and other commercial flights are adopting the strategies. First, the company realizes success by keeping its operations simple and delegating duties to the staff. Additionally, the high grade is based on Southwest Airline’s ability to treat employees with respect.
Nevertheless, I don’t love some policies of Southwest Airline. For instance, I don’t like that the company advice obese travelers to purchase two tickets (Airline policies n. p.). Further, there are some claims that the firm is keen on reducing its maintenance expenditure which increases the risk of accidents. Also, I think the company’s security is not efficient; there are instances of misbehavior in the plane during flights.
Weakness or problems of Southwest Airlines
Southwest Airlines has numerous strengths, but it also has several problems. First, the airline should struggle to retain its customer base. The passengers should continue increasing to ensure the company meets its financial objectives. If the Southwest Airline’s strategy fails, the company may realize a drop in passengers and that will lead to fast worker turnover. As of December 2009, Southwest Airlines was already facing a decline in revenue and profit (Maynard n. p.). Most importantly, financial problems can severely impact the company.
Another issue is that Southwest Airlines face is competition. Many commercial flights in the United States offer similar services like Southwest Airlines. Furthermore, most airline companies in the U.S. copy the Southwest Airline’s strategy. They provide cheap and high-quality services, which heightens competition.
Additionally, Southwest Airlines requires investing massive amounts of money in the planned expansion. The acquisition of the more planes is still a problem that Southwest Airlines has to handle. The company faces a weakness in the maintenance of its planes. That weakness might scare away passengers from using the airlines. The company is still growing to new cities where it may face environmental problems.
Southwest Airlines Co (n. p.) insists that it will continue incurring costs in the process of integrating AirTran into its operations. These costs include maintaining the acquired aircraft and dealing with the 8000 new employees from AirTran.
If the acquisition of AirTran is a good strategy
I think Southwest Airlines took a good move by obtaining AirTran since it’s a key competitor. Now Southwest Airlines won’t face much competition on the market. Also, Southwest Airlines acquired new flight destinations close to 70 airports (Mouawad para. 9). The company is well-positioned to expand internationally specifically to Mexico and other South American countries. The bid to be the largest commercial flight provider in the U.S. is now real, and the company continues to strengthen its strategies. Another key benefit of acquiring AirTran is getting more aircraft. According to Zendrian (para. 6), Southwest Airlines got 138 aircraft of different models to boost its position in the market.
However, the planned growth won’t be realized immediately. It will take time, probably years before Southwest Airlines restores its position on the market. Also, the company has a new CEO, who may have different strategies. Importantly, the new CEO is a key determinant as to whether Southwest Airlines will achieve its objectives within the set timeline.
Issues that Southwest and Gary Kelly management has to deal with
Southwest Airlines has a tendency of hiring new employees and training them instead of reforming the existing ones. After acquiring AirTran, Southwest got about 8000 new workers (Yamanouchi para 3). The company has to devise a way to accommodate the employees since it can’t drop them all. Southwest will have challenges in training these employees to match the required standards. Some of the AirTran employees may even resist some cultures and strategies of Southwest Airlines. Conflicts may arise during the integration process. Mistrust may also arise among the employees and between the management. Issues of salaries, allowances and offs may arise between the management and staff affecting the company negatively.
Southwest Airlines should plan to sell some aircraft since operating too many aircraft will not be ideal. Additionally, the company has to stop flights to some routes which aren’t profitable. Southwest Airlines may have to terminate contracts of AirTran and sign new agreements.
Recommendations to Gary Kelly and Southwest management
I have several suggestions to the management, which will ensure continued success. The ticketing procedure shouldn’t be fully mechanized to offer convenience to all passengers. The staff should provide prompt responses to customers on matters of flight scheduling and booking. Security in the planes is essential, so the management should strive to ensure passengers travel without wrangles. Also, the company should introduce more flexible flights to meet all customer needs. They should add more destinations to their flights especially those that are in high demand.
Southwest Airlines should not employ the strategy of cutting cost by reducing maintenance. That may increase risks of accidents. The executives should ensure all the aircraft are in a good state to attract more passengers. The company should maintain its culture of offering low-cost flights and high-quality customer services. The executives should ensure passengers get great experience just like the mission of Southwest Airlines states. The executives should not fire all the employees of AirTran. Instead, the workers should be trained to suit in the Southwest Airlines culture.
Conclusion
The case study of Southwest Airlines reveals that the company is successful in offering commercial flights to different destinations in the U.S. The company upholds a culture of providing affordable flights and ensuring the customers are satisfied. The opportunities that Southwest Airline has include a growing demand for air flights and ability to expand to new destinations. Some problems that Southwest Airline faces include issues of integrating AirTran aircraft and staff to its operation and maintaining its reputation. However, the Southwest Airlines faces high competition from other airlines, high operational costs, and dealing with frequent aircraft maintenance. Southwest Airlines has to stick to its culture, reduce the cost of operation and put strategies that will ensure increased revenue and profits.
Works cited
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