CAMARAO, Josh

CARIAGA, Carla Mae

CARITATIVO,Kring

STRAMAN K37
ANALYSIS FOR CASE 13
March 20, 2013

CASTILLO, Renniff

I.

Strategic Profile and Case Analysis Purpose

Southwest Airlines was the market share leader in domestic air travel in the US on the year
2010. Its strategy pursuits low operating costs, low fares, and customer-pleasing service. It was
once an underdog in the airline industry but now it is seen as a major competitor in the industry.
Despite the economic downturns, public scrutiny, fortuitous events, and action of rivals, it has
managed to overcome all these challenges. Furthermore, one of the major strategies of the
company is valuing its people. Today, Southwest Airlines pursues expansion and has recently
acquired AirTran Holding, Inc.

II.

Situational Analysis

A. General Environmental Analysis

Southwest Airlines continuously to grow as independent airline and having strong
competitive standing in the market despite of the negative outcomes in the
economy. The company has been considered as one of the biggest competitor in
the industry.
1. Demographic
Since Southwest Airlines provide low fare rates, people emerge and opt to have
cheaper flights and at the same time having a good quality service.
2. Technologicalb
In order for one to be a good competitor in the industry, a company must be up to

date with the latest trends in technology particularly with the flight system, aircraft
maintenance, and providing good service to not only maintain its growing
consumers, but also shows its strong image that makes competitors be inferior to
them.
3. Economicb
The economic downturn can be a limitation of this company to be a success
since there would be fewer passengers to travel. But since Southwest Airlines
offers low fares, it becomes an opportunity for them because there are still travel
passengers who would travel for less.
4. Political/Legal
With its strong image, this kind of industry has led consumers learn to trust this
company. The validity and service they provide makes Southwest airline a
reputable and trusted company.
5. Sociocultural
Anything that can be exciting entices consumers. Thus, Southwest airlines do not
stick with the traditional rather, they come up with strategies that would make
people prefer this airline since it is adaptable and suits the liking of their
consumers.
6. Global
This kind of system continuously to grow world wide, along with the increasing
number of competitors, it would be inevitable for it to be known.
A. Industry Analysis
Airlines should provide good quality service; give appropriate pricing, and making sure
that their aircrafts are well equipped. But what sets Southwest airlines apart from its
competitors are, their marketing strategy makes the airline interesting and fun.

B. Competitor Analysis

Having a strong images makes this airline a strong one that sets its competitors to
compete with them .The management team of Southwest airlines make sure that aside
from what the consumers need, they also provide what they want. Most especially that it
is time consuming to travel; they make sure that the reputation of the company does not
sacrifice the safety of the passengers.
C. Internal Analysis
The people behind the airline are good with what they are doing. By offering that
Southwest airlines can be socially adaptive, it shows that everyone can be at ease with it.
Having employees and personnel that possesses good positive attitude can be a reflection of
the companys overall image.

III.

SWOT Analysis

Strengths

Effective overall strategy

Southwests strategy aims low cost for the company, low fare for the customers and no frills in
their services. The company also values people because they believe that if the employees re
happy, they make the customers happy. Southwest also has a cost advantage over its rivals.

Strong brand name image/company reputation

Southwest is known for having low operating costs, low fares, and customer-pleasing service.
These are the main factors that contributed to the good image or reputation of Southwest. The
company made air flight affordable for a huge segment in the US. The companys value for their
employees is also a large aspect of their image. They have an established reputation as one of
the best companies to work for in America.

Marketing strategies

Southwest exemplifies an airline company that has effective marketing strategies. At the
beginning, it had its flight attendants wear colourful hot pants and white-knee high boots with
high heels. They also offered free alcoholic beverages during daytime flights. They made use of

very interesting and attention-grabbing taglines and advertisements. Theyre marketing

strategies led to the identification of their target market which are business travellers who were
more time-sensitive and wanted weekly flights suitable for conducting business and pricesensitive leisure travellers who wanted lower fares and more flexible.

Operations and good customer satisfaction

The company does things in a way that will be efficient for them and will save them costs. An
example would be the 10-minute turn and the all-inclusive fare price. Their route systems are
carefully designed and they have good customer service which leads to customer satisfaction.

Leaders

All of the companys CEOs, from when it was established until the present, were legendary.
They used their skills may it be entrepreneurial, financial, people, and the like, to uplift the
company as well as its people. Lamar Muse, Herb Kelleher, and Colleen Barrett are some of the
former CEOs of Southwest. Lamar Muse knew the business well and he used his
entrepreneurial skills to build an airline from scratch. Herb Kelleher had a different approach
from the conventional way of managing a company. His style was to listen, observe, and offer
encouragement. Colleen Barrett spent most of her time on culture building, morale building, and
customer service.

Corporate culture and dedicated employees

Employees of the company are highly motivated for a major part of the companys corporate
culture gives importance to their people. Company personnel displayed can-do attitudes and
adeptness at getting by on whatever resources were available. Employees are treated as the
creators. The company even established Southwests University for People to train their
employees. The company also implemented laws that give importance to employees like the no
lay-off policy.

Weaknesses

No international flights offered

Dependent on a single type of aircraft (Boeing)

One type of seating no first class, etc.

Opportunities

Add flights in areas where rivals were cutting back service

Add international flights

Alliances or acquisition of other airline companies

Better use of internet (for marketing, ticketing, hiring, etc.)

Threats

Immense competition between current and well-established rival companies

Economic conditions/recession (can be attributed to the cause of decline in passenger

air travel)

Fortuitous events (e.g. 9/11, weather uncertainty, terrorist attacks, etc.)

Rise of oil prices

IV.

Strategic Formulation

A. Strategic Alternatives
a. Create flights with luxury options
b. Explore international services through allainces with other carriers
c. Further push Southwest in customer loyalty
B. Startegic Evaluation
a. Southwest Airlines has been successfully capturing market share in the airline
industry by offering low cost fare across all flights. It has focused on offering very
satisfying service and product with its light price tag. However, it is unreasonable
to look away from the option of offering a rather luxurios set of products or
services while in the aircraft itself. Yes, most airline companies do this, but
Southwest has a better chance of earning from it since they have majority of the
aircraft passengers in the country. Coupled with their rather cheap airfare, it is
undeniably tempting to avail of such luxury options once in the aircraft. This

strategy is improving their product by offering customers further service and

products that are rare in low cost carriers. More value for the dollar.
b. Southwest Airlines has its limitations as it has its advantages. Aside from
boarding from budget airports, Southwest Airlines also do not serve to a wide
range of destinations. Domestically, they are capable, but internationally, they
are but absent from the scene (except for Mexico and Carribean). Though, it has
partnered, bought AirTran Airways, with other carriers to be its US airline,
Southwest should also partner with carriers in other countries to be Southwests
domestic carrier for its international flights. Though it would take time for
Southwest to understand and analyze the international market, Southwest is in
the best position to risk and invest in it while it is profiting domestically.
c. Some people believe that customer loyalty is not on top of the list of companies
like Southwest that offer low cost service to people. It is designed that people will
readily seek its services when expectations and price seem agreeable. However,
Southwest is a big company with big ambitions. It is imperative that they will seek
more business and profit opportunities in the future. Therefore, it is vital that they
seek to capture the loyalty and fondness of customers to support of their future
undertakings. It will also add value to its name as being a company that
appreciates its clients. This strategy is all about building Southwests name
domestically, and in the future, internationally.b
C. Alternative Choice.
a. It is fair to push through Alternative C in preparation to go with Alternative B.
Cementing their market standing and brand value domestically will pave the way
for Southwests inevitable entry to the more hectic international carrier industry.
As Southwest continues to gain ground in the US, it should look for more
business challenges as it begins to try its hand and strategies across different
geographic markets. It remains to be seen if Southwest will run a transnational
strategy once it enters the international market. As stated, Southwest is in the
best position to risk in expanding internationally now.
V. Strategic Alternative Implementation

As presented in the alternative choice under the strategic formulation, at the moment, it
is safest and quickest to venture on a strategic alternative which seeks to further push

Southwest in customer loyalty. It was also stated under the alternative choice that the
implementation of such strategy will allow the company to have a stronger position in its current
market which can later on support its future plans of entering the international carrier industry.
With that said, Southwests ability to hit two birds with one stone lies on the effectivity of the
following specific approach customization it should choose to undertake.
The loyalty of a firms market represents the companys strong bond that it has
established with the former. This loyalty spurts out from the devolopment of a customers
commitment to a specific brand despite opportunities to go elsewhere for the same or
comparable services. This is maintained when the perception of benefits in doing transaction
with a company compensates all potential negatives it dominates. In this case, customer
satisfaction seems to be the most appropriate aspect to call upon in order to improve on
customer loyalty.

Southwest Airlines in known not only for its low-cost leadership but also for the type of
people management it applies. The company takes pride in its being employee based as this
reflects their conception of having happy employees leads to having happy customers. This
belief does pay the company with the outcome it deserves as this conception gives them an
advantage in developing their integrity with both their employees as well as their valued clients.
The relationship of the variables in this conception is demonstrated by the fact that the primary
interaction and company representation that both customers and prospective market get is that
of a companys employees.
To further improve the loyalty of Southwests customers through its employees, it can
improve its human resource management or recruitment by seeing to it that the people they
have are hred for their attitued and trained for skills. Additional to this is that these employees
should be rooted in the belief that customers are important and should also posses that funloving and highly spirited traits to capture the attention of like-minded individuals. The company
should also customize various mandatory and business related trainings that can be given to
employees according to their profile (leadership, customer care, safety, stress management,
corporate culture, and etc.). Another way to use its employees for the betterment of its
customers loyalty is by utilizing the nature or incentives and compensation it already has.