Southwest airlines performance in recent years has been outstanding compared to the rest of the airline industry. The company has maintained a stable increase of income, having year over year profitability since 1973, despite the fact that industry where it competes is characterized by being vulnerable to the recent downward economics and an intense rivalry between competitors. Southwest is one of the US largest airline carriers in terms of domestic passengers boarded, serving for more than 70 cities in more than 35 states. It has one of the lowest cost structures in the domestic airlines industry, and consistently has been offering the lowest and simplest fares without losing its commitment of providing customers with the best experience possible by maintaining their emphasis on the value of people. The challenge presented in this study is to plan Southwest’s continuing success for the long term, by taking in consideration new situations in the market place as well as the resources and competitive advantages that it has. The information and ideas presented in this plan are confidential and exclusive property of the group’s of top students that are developing and presenting this plan.
II. Summary for the Business Plan:
This document includes an analysis of the External Environment where Southwest does business where we found important Threats generated primarily by Competitor’s Movements such as the traditional airlines offering new Domestic Low-fare Product Options along with their existing International flights, which is product category where Southwest does not compete. In Southwest’s Internal Environment we found important Strengths that generate competitive advantages, such as the excellent customer service and punctuality, employee’s that care about the success of the business, technological innovations and a fuel-hedging process among others, that makes them cost efficient. We did recognize that Southwest’s current strengths should continued to be developed per the current strategy, because it has resulted in above average return on investment for the last 35 years; however, a new Corporate Strategy to enter the International Low-fare industry should be considered to continue its profitability and long term success.
III. Business Plan
A). Case context: Strategic Business Area where Southwest Airlines competes. A.1.) Profile for Southwest Airlines.
A.1.1). General Description of the Strategic Business Unit (SBU): Southwest airlines Co. is a major low fare U.S. airline that primarily provides short trips, high frequency of flights, point to point and low fare services to domestic users. The company was incorporated in Texas and begins operating on June 18, 1971 with 3 Boeing 737 aircrafts and serving 3 Texas cities – Dallas, Houston and San Antonio. It trades in the New York Stock Exchange with the ticker symbol of LUV, which had a stock value of $8.62/share in Dec-31st-2008 and came down to $6.33/share in March-31st 2009. Exhibit 1. LUV NYSE
Source: Southwest Airlines (2012b) from http://southwest.investorroom.com/historical-stock-price A.1.2). Southwest Airlines is known among the airline industry as a low-fare leader that differentiates itself by providing reliable air transportation, excellent customer service, competitive price and by having flexibility, which allows them to be a profitable business. Brand and Slogans of Southwest Airlines:
Exhibit 2. Southwest Logos
Source: Southwest Airlines (2012) from http://www.swamedia.com/channels/Logos/photos
According to Wikipedia, 2012, Southwest Airlines has employed humor in its advertising. Their Slogans include: “Just plane smart”, “There is somebody else up there who loves you” and “The low fare airline”. Their current slogan is “Grab your bag, It’s On!” Southwest business Model: Low Cost airline with short point to point flights, fast...