Business-level and Corporate-level Strategies of Southwest Airlines

BUSINESS-LEVEL AND CORPORATE-LEVEL STRATEGIES
Student's Name:
Professor's Name:
Course Title:
Submission Date:
The Case for Southwest Airlines
Southwest Airlines has continuously been an inspiration for the entire United States aviation industry as well as businesses across the globe. Their success story, especially centering on their ability to provide low-cost airfare and unmatched customer experiences, has obviously contributed immensely to their current status as the best domestic carrier in the United States. Southwest Airlines continues to be one of the most classic examples of an airline with a defined, simple and clear business as well as corporate strategies. It has been touted as the best company to have chosen the right business model in order to support its business and corporate purpose. To this effect, the company continues to demonstrate its core values as well as behaviors that are derived from its business and corporate purpose.
Southwest Airlines has a brand commitment of providing the highest quality customer experiences with a sense of friendliness, individual pride, warmth, and Company Spirit. In the same vein, all the company's employees are aligned with this commitment. By aligning their employees to their brand promise, the company has been able to maintain exceptionally high staff morale. The high staff motivation can be directly linked to their stellar performances year over year for over four decades.
However, the successes of Southwest Airlines have not come easily. The company has had to battle some of its competitors in the courts for almost three and a half years. Most of its court battles with its competitors were based on their core business model of providing low-cost airfares and cost efficiency. Its competitors termed the business model as ineffective, threatening, and disruptive to the entire US aviation industry. However, its competitors' stance was objected by the higher courts.
Business and Corporate Strategies
Southwest Airlines currently participates in one industry: As such, its business and corporate strategies tend to be the same. Based on the company's SWOT analysis, Southwest has positioned itself as a major disruptor in the domestic airline industry. Additionally, Southwest is committed to respond to challenges in the airline industry as exposed by Porter's Five Forces Model. The first business level strategy that Southwest has adopted is the low-cost model. Through this model, the company has carved out a niche for itself as the best in this category, beating increasingly fierce rivals such as JetBlue Airlines. The company has further pursued various areas in order to maintain its brand as well as leadership roles in the market. For example, it has expanded its service routes - a strategy meant to increase its market share.
Additionally, Southwest Airlines has effectively focused on its customers in order to create a loyal customer base. A loyal customer base translates to increased market share because satisfied customers will always come back, even more frequently. The ability of the company to maintain a loyal customer force ensures that it counters the pressure of customers who seek frequent substitutions; the number of customers seeking substitutions is currently on the rise in the entire airline industry, indicating dissatisfied customers. However, for Southwest, the increasing loyal customers point to a brighter future for the company.
The company's greatest strength in ensuring utmost customer satisfaction has been its workforce. By valuing its employees, Southwest creates an appreciative work culture and environment. This culture is then reciprocated by the employees who give their best for the sake of the customers. This translates to high levels of customer service and experience. Moreover, valuing employees means that the company has greatly minimized employee turnover ratios. This, therefore, translates to reduction in the costs of training and time wasted searching for the right workforce.
In its endeavor as a low-cost and cost effective carrier, Southwest Airlines has capitalized on its strength as the domestic leader by implementing labor agreements with its major workforce. This includes the company's mechanics and pilots who tend to be the highest unionized employees for Southwest. The implementation of labor agreements seeks to lower costs associated with labor as well as increase efficiency in the company.
For example, Southwest was able to seal an agreement with its pilots' union to allow pilots to fly an additional 1 to 1.5 more hours every month since December 2005. The increase in the number of hours flown has resulted to a significant increase in pilots' labor productivity. As a result of this agreement, Southwest does not have to hire additional pilots to fly the hours missed as the company expands in the future. The agreement also saves the company about $4million annually. Such agreements are all in support of Southwest's business and corporate strategies of having a low-cost model and expansion strategy, respectively.
Rising fuel costs continue to trouble the airline industry not only in the United States, but also across the globe. Rising fuel costs translate to increased expenditures and lean profit margins or losses (in most cases). To avoid such damaging effects, Southwest Airlines has adopt...