Southwest Airlines Strategic Plan

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Southwest Airlines’ Strategic Management

Chungsun Park
Nonhanhla Nene
Mohit Khatri
Junbai Ma

HOS 407 – Strategic Management
Dr. Richard L. Valente
12/12/2011
Table of Contents
Executive Summary3
Mission, Vision, Values, and Goals4
Organizational Structure5
Management Process and Roles6
Porter’s Five Forces6
Threat of New Entrants6
Threat of Substitute Products8
Bargaining Power of Suppliers9
Bargaining Power of Buyers10
Rivalry11
The Roots of Competitive Advantage12
Distinctive Competencies12
Capabilities15
Competitive Advantage, Value Creation, and Profitability16
The Value Chain19
Primary Activities19
Support Activities20
The Building Blocks of Competitive Advantage21
Quality21
Innovation22
Customer Responsiveness23
Analyzing Competitive Advantage and Profitability24
SWOT Analysis28
Business Level Strategy29
Business Strategies29
References33

Executive Summary

Due to the economic crisis, fuel prices, and act of god environmental crisis, airline industries have suffered in the last ten years. However, these major threats do not seem to threaten Southwest Airlines. In fact, Southwest has been achieving consistent annual profitability for 38 consecutive years. (“Annual Report,” 2010) The primary objective of Southwest Airlines is to care, respect, and treat all employees (nearly 35,000) fairly and equally because Southwest has a strong belief that their employees are the key to success; “employees come first” (“Southwest Airline Employee Motivation,” 2011). With valuable employees, Southwest Airlines is one of the largest and most successful low-cost airlines in the United States. With valuable employees, Southwest Airlines has differentiated themselves from all of their competitors, providing the lowest fares with the highest quality of customer service.

In order to increase customer satisfaction and maintain the lowest fares, Southwest Airlines has been implementing Cost Leadership / Low Cost Structure as their primary generic business level strategy including: a single aircraft type, point-to-point route system, e-ticketing, secondary airports, and highly productive employees. With their business level strategy, Southwest achieved a record $12,104 million in total operating revenues and the total operating revenues increased 17% from year of 2009. In addition, Southwest received the lowest ratio of complaints per passengers boarded on all major U.S. carriers. (“Annual Report,” 2010)

The major goal of Southwest Airlines is to keep the promise to their valuable customers and to provide the highest quality of customer service. Therefore, Southwest Airlines would like to ensure and remind their valued employees that despite the ongoing economic conditions, the quality of customer service should not have to change. In order to support the quality of customer service, Southwest intends to provide safe, affordable, reliable, timely, courteous, and efficient air transportation and baggage handling service on every flight without surprises. Southwest continues to yield profitability while maintaining and focusing on their mission, vision, and goals.

Mission, Vision, Values, and Goals

Mission Statement
“The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit” (“About Southwest,” 2011).

Mission Statement to the Employees
“We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer” (“About Southwest,” 2011).

Vision Statement
“Our vision is to expand our...
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