Southwest Airlines Strategic Analysis

Executive summary:

Table of Contents

Southwest Airlines Company has witness its success within a highly competitive airline industry. The airline faces stiff competition in the United States. Developing a strategy via the lens of leadership involves examining the important tasks that have to be undertaken by a leader to execute and create a strategy. The managers, with the aim of selecting a focal point may realize that strategic activities such as competitive analysis, industry analysis and the internal analysis of the company are aspects that fall under second priority.

Instead they have to examine the key aspects which determine the failure or success of a given strategy. A business leader has to carry out five main phases in strategy making and executing process which are developing objectives and goals, mission and vision and strategy crafting before the execution of a strategy. This paper presents an analysis of Southwest Airlines by evaluating the company’s mission, vision, values and goals. The stakeholder’s interest and recommendations will be presented.

Corporate value

Southwest airline has its own corporate culture that clearly shows the positive features of the company. The main success of the company is mainly based on its ability to use its corporate culture in value development. The company in the past years has expressed a low turnover rate and increased productivity which show that the airline has successfully managed to create an important value to its employees. This culture helps in development of Team Corporation and good communication among all employees. The top management and executive do nurture and support collaboration culture. The airline industry has succeeded in developing a positive working environment that can be enjoyed by all employees. This leads to the provision of better services to the customers and a general increase in profits to this organization.

Mission Statement

According to the customer service manual, Southwest Airline mission include its stock and is part of the culture of this airline company. The mission indicates that southwest is a dedicated firm that aims to achieve the top quality delivery of services to its customers with the sense of friendliness, warmth, company spirit and individual pride (Ruppel, 2009). This mission statement acts as a guiding rule to all activities conducted by southwest ranging from the financial operations to how each individual employee is treated in the company.

Southwest through the mission statement has tried much in personalizing the kind of services offered to the customers. The company aims to implement the most suitable environment and public service for its employees and customers especially now that Southwest has scaled back most of its offered services. This mission statement is part of the culture of Southwest airline in that the services offered is basically based on the mission statement of this firm. Missions are structured to communicate the aspirations of the organization and to influence resource allocation and behaviours in an organization (Verma, 2000, p 2).

The wording of the mission of Southwest is mainly chosen mainly to exemplify how services to customers will be conducted; in that the services will be delivered in friendliness and with a sense of warmth (Rippel, 2009). For example, CNN News aired a story on how a pilot of the Southwest airplanes had to delay the flight so that one of the passengers could not miss the flight (Avon, 2011). This is a unique thing that could have seen other companies punishing the passengers for delaying other customers. That shows how the company is keen to act within its mission statement of providing friendly and warm services to its customers.

The employees also make the company’s mission to be a guiding aspect in work ethics. The airline conducts team building functions that involve each employees starting from the CEO to other participants at all ranks to equally participants in these activities. The employees are also encouraged and supported by the company to get involved in the community in volunteer activities. By focusing on its mission statement, Southwest has managed to attain the “Company spirit vision” by working with the community and not just on business grounds.

Vision statement

Southwest Airline Company has an important value for it clearly presents the company’s vision statement that describes its services value and future vision. Southwest airline’s vision statement indicates that the company’s vision is to expand its locations both domestically and internationally by being one of the most profitable and largest airline organization to efficiently achieve long-haul and short carriers at a low cost. Further, the company aims to be a carrier with one of the most productive and committed workforces that guarantee its customers of the best flight.

The kind of commitment held by Southwest towards its vision statement and mission play an important role in giving direction to the organization (Slack, Orife, & Anderson, 2010, pg 421). If this commitment to its mission and vision is continued to be kept as a reality, then it will be possible for Southwest to remain one of the top airlines in the provision of quality service to customers, superior working environment and low cost of airfare within this industry.

The goals on stakeholder’s interest

The Southwest Airline’s balance sheet and statements shows the profitability rate of the company. Income statement from 2008 to 2010 indicates a drop in the gross profit and on total revenue (Southwest Income statement, 2011). This drop is mainly due to the U.S recession of 2008/2009. However in 2010 Southwest saw a major increased in its total revenue by $1,754 and in gross profits by $ 677 (Southwest Airlines 2011). The increase of gross profits and revenue means additional returns to the stakeholders.

The overall profit increase is mainly attributed to the way this airline industry is capable of managing its strength and making effort to improve its weaknesses. One of the strength that is visible in Southwest is the superior customer services provided to customers. Customer service value is a vital aspect in the vision and mission of Southwest. The mission clearly shows how the company is dedicated on offering highest quality customer service based on individual pride, company spirit, friendliness, and warmth. The value is utilized by Southwest to regain its competitive footage in the industry especially after the recession. Therefore the interests, goals and needs of the stakeholders are considered within the goals of the airline company.

Recommendation on changes

Southwest is faced with the problem of low productivity among employees. This is an issue that results from corporate culture of Southwest on employee appreciation, loyalty and fun. These values makes businesses to have less time in dealing with business operation and waste more time on the cultivation of the desired corporate environment. The corporate culture therefore has to change to prevent a loss on company’s time and to focus more non business related activities that brings more profits to the organization.

The over reliance on customer revenue is also, another weakness that Southwest has that made it to suffer huge losses at the time of recession. This calls for the need of the company to consider other means of income so as to prevent a repeat of the same, where it still relied on customer revenue when the times were hard. One way is for Southwest to expand its growing business on airfreight so as to establish a much more balanced strategy for profits generation.

Southwest can consider a new approach in creating customer loyalty by expanding its reward systems. such a reward system can be based on points scores which customers can redeem and earn better rewards based on the number of times they have boarded southwest planes. For example when a customer has redeemed 100 points he or she can receive a voucher for free luggage check for two luggages.

The points reward program will present an opportunity for Southwest to establish partnerships beyond the airline industry and to reach to other new unexplored markets. Thus, the airline company would gain an opportunity to expand its self advertising in areas such as food chain restaurants and to reach into its targeted market. The formed customer loyalty will therefore not just be based on low prices but due to the rewards they received based on the undertaken flights with the airline.

Conclusion

The vision statement, mission statement, organizational value and culture and goals and objects act as the guidelines to all the activities that southwest airline get involves in. The airline company clearly shows its goal to be a leading and profitable firm in the airline industry through the provision of high quality service to its customers. The stakeholder’s interest is further guided by the goal, vision, and mission of the airline company. Therefore these aspects are essential in ensuring that Southwest maintains and gains strength to gain competitive advantage in the airline industry.

Generally, Southwest has managed to do a good job in recovering its business from the time of recession and in putting a balance of its weaknesses and strength. The company can consider developing new strategies that will help build on customer loyalty and avoid the over reliance on customer revenue. The raid reward program currently used is a simple system which takes long to mature before the clients earn a freed ticket. Such a program can be improved so that the customers can earn points and rewards no mater the level of their air travel. This will see an increase in the general profits for the airline and separates southwest from other companies within the industry.

Reference:

Avon, N (2011) Pilot holds flight for man going to see dying grandson. CNN,

Retrieved from

http://articles.cnn.com/2011 -01-14/travel/southwest.pilot.

On July 19, 2012

Ruppel, J (2009) Southwest airlines customer service commitment Dallas, TX: Southwest

Airlines Co.

Southwest Airlines (2011) Southwest media Retrieved from

http://swamedia.com/

On July 19, 2012

Verma, H (2009) Mission statements- a study of intent and influence, Journal of Services

Research, 9, p 153-172.