Reference no: EM132121740
Strategies for confronting these problems and issues are generated through a SWOT analysis for Southwest. By combining Southwest’s strengths, weaknesses, opportunities, and threats to work together or versus each other, the following strategies have been created.
In an effort to penetrate the current market for growth, Southwest can increase marketing efforts within their core competency of offering their flights without additional fees which should continue to attract cost-conscious customers and keep their current customers from switching. Marketing efforts should also continue to promote the economic side of their low-cost flights with the bonus of their up to date technology and modern fleet over its competitors and substitute methods of travel.
Market penetration can also be utilized to increase their recently acquired hub in the east, from a merger with AirTran in 2011, more effectively and reach out to additional areas/locations they don’t currently service domestically. Horizontal integration combined with their strong financial position to acquire other smaller airlines could also be a key strategy to reduce the competition and increase service coverage areas through market development.
Product development would be an interesting avenue for Southwest to venture into, which could include offering a first-class section that offers cost savings to loyal corporate consumers. Integration of a first-class section could also include providing a new luxury subdivision line for corporate/wealthy customers that are willing to pay a higher cost for excellent and custom luxury services. These strategies would expand on their weakness of providing product differentiation and increasing the market share.
Pursuing global growth to confront their internal weakness of lack of international flights is also a concept that will assist in diminishing the threat of steady industry growth and maintaining market share. Offering more international flights and/or acquiring other smaller airlines to reduce the competition and increase service coverage areas through market development will increase market share in the industry domestically and globally.
Forward integration could be pursued as Southwest could exert its strong financial position to expand into design and engineering efforts. Backward or horizontal integration efforts are strategies that would offer stabilization or control of their operating costs through investments in oil or training of pilots. Southwest’s strong financial position could also be used to bargain with suppliers on an investment level in pursuing mergers with supplier companies.
Related and/or unrelated diversification offers some unique concepts to create cross-business strategies or mergers to help diversify the company. Perhaps to increase investments into areas that would change the bargaining power of their suppliers or enter into joint ventures/mergers with companies offering other energy sources that provide substitute transportation.
One more idea that isn’t included in our SWOT strategies stems from complementarity ideas that are discussed in Priem's article, " A Consumer Perspective on Value Creation.” As mentioned in his article, "consumers are arbiters of value…willing consumers validate the value of products and services" (Priem R. L., 2007). Many customer debates have centered around the removal of inflight meals (Paris, 2017). Although removal allowed for lower ticket prices, there are customers that would pay the higher fee to bring back inflight meals on many long non-stop flights (Paris, 2017). This slight ‘back-step’ business strategy could pan out as a future opportunity. Within the past year airlines such as American Airlines, Delta, British Airways, Hawaiian Airlines have started this service back up (Paris, 2017). Delta cited "competitive advantage" as the reason for the addition of inflight meals (Paris, 2017). This could be an opportunity for Southwest to join in setting themselves apart from other competition on longer flights.