This is the historic background of an American airline company called the Southwest Airlines Co. based in Dallas which still exists and operates with great success between 57 cities in 26 states of the US, by over 300 airplanes, providing primarily short-haul, high frequency, point to point, low fare service. Through this essay we will see an analysis of the company’s advantages and disadvantages through a SWOT Analysis. We will try to localize the problems of the company at the time and in the case of a future expansion, and we will try to give a number of alternative solutions and chose one of them.
The Southwest Airlines is a company that has done its first movements in the airline world in 1971 after many efforts for its opening through legal battles with competitors that did not believe that there was any particular reason why the another airline company should exist among all the others already existing. The different things that the new airline company provided were many and very interesting. The idea started from two friends Rolling King, and investment advisor, and Herb Kelleher, his lawyer, who met in order to discuss the idea of Rolling King for a low-fare, no- frills airline to fly between three major cities in Texas. The outcome of this discussion was in reality the decision of the two men to go for something that they believed would work, even though they were not positive about that.
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After all the legal battles between the two men and the airline companies of Texas at the time who believed it was not necessary for another airline company to enter the market, battles that prevented the operation of the company for three whole years, Southwest Airlines Co. had become a reality. Other legal battles followed in the future that justified the Southwest Airlines but left the company broke, while during the first year of its operations made losses and the earnings for the next half a year were balancing with costs. Gladly the recovery came soon and by 1978 Southwest Airlines was one of the most profitable in the country. Later on, Southwest Airlines Co. managed to provide airline transportation in eight more cities in Texas and dominated the Texas market, with low prices and frequent departures.
Today the Southwest Airlines Co. is a very big domestic airline company, the fourth in the US. We will now have a small analysis of the company’s environmental situation and then we will try to have an Analysis in order to underline any kind of problems that the company may have and see all the alternative solutions that may occur. Our final movement will be the choice of one of the alternative solutions for the benefit of the company in the future. The Internal Environment of the Southwest Airlines Co. consists of all the people that work in the company.
The most important ones are the establishes of the company, Rollin King, the investment advisor and Herb Kelleher who later became the manager of the company. The internal environment of the Southwest Airlines Co. also consists of other dramatically important, as it seems, people, who are the employees. The importance of those people can be noted by several ways. From the fact that all the people working for the company have never been dismissed, from the fact that they operate and work like a family, for instance pilots do the work of flight attendants in order to help them when emergency arises, which is not considered as an unusual phenomenon.
Also from the fact that for 24 years only 3 people have been laid off but immediately were hired back. This kind of dealing situations within the limits of the company shows that the managers of this particular company operate with a first priority the people working with them, the employees, and have figured out that by keeping their employees satisfied in their working environment they will manage in a much better and efficient way to satisfy their customers, upon which the existence and the operation of the company depends. One of the most important movements that characterize the company is the fact that there have been used all the brand new ideas concerning the establishment and expansion of the company in its beginning and much later. For instance a completely different tactic was used for the routes that the company would cover.
... / company information. htmlSouthwest Airlines, Southwest Airlines Fact Sheet. (n. d. ). Fact Sheet. Retrieved April 8, 2003 from web sw a / press /fact sheet. htmlSouthwest Airlines, The Mission of Southwest Airlines. ... keeping costs low and turn profits, Southwest Airlines has proven just that. Southwest Airlines survived the initial years of deregulation, years of cyclical business cycles that ...
Meaning there were smaller airports used for the transportation of the people, airports which were not so crowded and the customers surely preferred it in order to finish much sooner all the things they should do during departure and during arrival. Moves such as this on from the side of the Southwest Airlines Co. give a competitive advantage to the company among all others. One of the major external factors that helped Southwest Airlines in it’s expansion in during the latest years, is the fact that the managers of the company took advantage on the decrease in fuel costs in 1998. Travel demand increased in 1998 and the Southwest Airlines among most of the other airline companies reported operating profits.
The match of those two parameters, low oil prices and increase in traveling demand had a superior outcome for the company. On the other hand fuel may be an enemy for the Southwest Airlines in the future. Oil prices are surely not predictable and there is no safety provided for any downturns or upturns in the demand and correspondingly the price of it in the near or far future. The competitors of Southwest Airlines were many. From the first day its establishes met problems in making their vision a reality and to achieve the goals they had in mind. The problems started from the carriers Bra niff, Texas International, and Continental, which blocked approval with a temporary restraining order, with the excuse that Texas did not need any more another carrier.
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After this first battle the Southwest Airlines had very much difficult in recovering the damages done from the delays of the opening of the company. Other competitors followed during the first years concerning the opening of the new airport in Dallas in 1974. Other competitors are considered all the other companies that compete with the Southwest today. Those companies are mainly three, and each one has its competitive advantage against the other one. For instance Continental Airlines later is competing with Southwest because of its much better performance at the moment and seems to reach Southwest. United Airlines is the world’s largest airline and has a global system when Southwest does not.
United because of its relationships with other shipping companies has managed to decrease its cost coming from travel agents. And finally, Delta, which is the largest air carrier in the US in terms of passengers, freight and mail service. The suppliers of Southwest Airlines do not seem to be as many as the other companies, but only the ones immediately needed for the work to be done. Southwest Airlines does not provide meals during the flight, but only provides drinks and peanuts. So its suppliers are automatically less than the ones an airline company such as British Airways uses. From the other point of view the suppliers seem to be the same as the suppliers of every other airline company are, such as the ones that provide the bunkers, the ones that provide the airport, etc.
The Southwest Airlines were the fifth-largest domestic carrier in terms of customers boarded. Thus means that the people using the particular air company are too many. The Southwest Airlines has a lot of customers to serve and seems to be getting very well with their demands and needs. The fact that the competitors of the company did not manage to create long term problems in the company shows that the company really gives great significance to the customers needs in her own unique way.
Southwest Airlines Co. – A competitive advantage. There are some things about the Southwest Airlines that consist the strengths of the company against all the other companies of the same kind such as Easy Jet or others such as KLM for instance. Those factors, consist the competitive advantage of the company against all the other airline companies, it’s competitors. One of those strengths is the fact that Southwest Airlines uses only one kind of airplanes for the transportation of its customers for the reason that every emergency can be covered by anyone working in the company at that particular time.
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That helps the company in order to be efficient at any time and overcome the problems that all the other companies have with the specialized stuff in different sectors that cannot cover the needs and emergency happening at all times. So delays due to such kind of technical reasons are avoided and the customers are much more satisfied. Another advantage of the Southwest Airline against the other companies is that it pays much attention to its employees. It is not so easy to be able and co-operate with the others so good that even a pilot would come in the position to help the flight attendants or the ground crew to do their jobs for instance.
It is mentioned in the case of the company that the employees of the company remain the same and none of them finally was laid-off. Thus means, that the operating part of the company as far as concerns the people working in the company is very good and no problems are arising because of the significant role, of the employees in the good running of the company as the managers of the company decide. As we are able to see the strategy that the company is following relays to the fact that employees are so important as the customers. More or less the actual problems of the Southwest Airlines from the day of its establishment until today’s have all been solved one way or another.
The threats by all the competitors in the past have all been solved through legal battles and the airline company has been justified. But the company at the time has some planning about the future prospects that contains future expand. Though there are still some problems concerning the rest of the competitiveness against its major competitors. Those problems do not constitute managing functions but other ones we shall go through. It is well known by now that the weaknesses of a company are its competitors opportunities and moreover that the strengths of our opponent, are our company’s threats. There are some areas where the Southwest Airlines does not have the not only the competitive advantage but is far behind.
Executive Summary Thousands of people travel by air; Southwest Airlines provides low-fare air transportation service among 58 cities in the United States. Although the industry suffered a major blow from the terrorist attack of September 11th, the company is still holding strong; while other airline companies are in debt. The information was majority gathered and analyzed from the internet; ...
One of those areas is that the major competitors of Southwest Airlines Co. are three very big companies, which are the United Airlines, Delta Air Lines, and America West Airlines. Those three major companies are huge companies in the same sector as the Southwest Airlines and there are some things that give the competitive advantage to those companies against the Southwest Airlines. One of those competitive advantages of the Southwest Airlines competitors, is the huge amount of employees of the United Airlines that overcomes the employee staff of the Southwest for about four times. Also, there is a huge number of aircraft’s and the huge number of locations in the US and overseas. The fact also that the United Airlines provide a respective short-haul flight between more cities than the Southwest Airlines in the Western States is one of the very important threats for the company.
The latter service as we can see from the case study is always a problem in the Southwest Airlines. From the other side Delta Airlines has the same advantages with the United Airlines, and also low-fare regional carrier service, and lately has been focusing in the transatlantic operations. Moreover, the America West Airlines, even though that has less employees than the Southwest Airlines, has earned more fiscal sales, and also serves routes in Mexico and Canada, plus some other destinations that are accessible for the America West It is well known by now that the weaknesses of a company are its competitor’s opportunity. The fact is that there are weaknesses concerning the Southwest Airlines. One weakness is the fact that most of the employees of the company are under agreements creating uncertain negotiations in their outcome leading to decreased profitability. The fact that Southwest has only one type of aircraft’s is an advantage in terms of efficiency in emergency times by covering the damages or delays with whoever is in charge at the moment, but it is not good for any company to be dependent from only one producer.
This is because if something happens in the producing company and there is a delay from the part of suppliers because of the producing company the damages may be unrecoverable, for the airline company. There are sufficient intentions on the part of the Southwest Airlines for expansion. The company though must be very careful during expanding for the reason that it still has major competitors that have to deal with and also because there are a lot of traps in expanding a company generally and especially when the company is of local type. There are some alternative solutions in attempting expanding and many difficult stages the company has to go through. One of the ways of expanding is by increasing its shares in the market. By such a movement the profit of the company will remarkably increase and there will be more capital available for transatlantic voyages to be provided.
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But there is a trick in this case. This way the company loses automatically and very quickly for the customers to adjust, the reputation of a short haul trips company in the local market. This may be dangerous since a twenty-nine year old very well established reputation is not that easy for the customers to forget. Moreover, if the transatlantic trips do not have such a success, this may influence the local transportation in terms of the number of customers. In this case it would be easier for the company to change it’s name and appearance in order to become more acceptable to the customers it already has, as transforming of the company into another more competitive one. Another way to expand would be the creation of trips in the foreign countries that are close to the US, such as Brazil, Mexico and Canada, and afterwards expand to other countries in other regions.
There could be for example an effort in only one or two countries in the EU, so the managing of the company will be in the position since there will be convenience of time to explore the market in EU and then decide how to expand in the rest of the region, how many flights a day are convenient, how the EU, for instance, operates, and if there is easy acceptance of such a service at the time. This is a way for the company to expand and not lose its identification as local service company at once. Customers will accept it more easily in this case. One more way is a change in the company in terms of technology.
For instance, at the time the managers use only one type of airplanes. In order to expand they may buy cheaper oil products and use the savings in order to purchase other kinds of equipment. This will make customers think differently since this action characterizes a company with more “accessories” and more flexibility. Different airplanes for local flights and others for outboard trips seem more attractive. This is also a way of advertising the company within the limits of a new market.
In my opinion the most wise of all the alternatives used is the slow expansion of the Southwest Airlines Co. in the capitals of foreign countries. The implementation of the market in such a way is much more easy and much more secure. It is a long-term change but maybe it is better this way, because the losses that may arise, that almost always arise, in the first points of a new entrance into the market will not surely be unrecoverable and will not damage the reputation of the company to the already existing customers. Moreover, the company will inevitably be advertised by this way without the necessity of thousands of dollars for the particular purpose as commonly used. As we can easily understand, that the economic situation of Southwest Airlines is quite good.
This fact allows the company to be more daring in it’s decisions, but this does not mean that not very careful steps must be followed, especially if the company has as a goal to keep it’s good reputation and of course it’s economic situation. Thus means that the procedure that will be followed for future expanding of the company should be a long-term goal. The politics that will be followed should take place slowly in the new market in order to avoid any possible big disappointments. An aggressive expansion would probably mean Penetration in a new market has always obstacles, which need to be overcome. The many years experience of the managers of the Southwest Airlines and the fact that it’s situation at the moment is very competitive will help the company in expanding in every way. Though the slip in the new markets should take place slowly and of course efficiently, as the company does until today in order to avoid surprises in the future.
Bibliography www. man. Southwest airlines co-strategy. com www. southwest com. /about sw a / airborne .
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html web sw a / press /07 1300 new flights. html web services / facts sheet html#Top Ten Airports web services / mission . html web sw a / press /3 q 00 earn. html Strategic Management – David Fred – 7 th edition – Brenty’s Hall Notes from the lectures during the semester about the schedule and the way the analysis of the case should be..