Southwest Airlines History & Business Strategy

The Design or Rational Model suggests that there are certain primary attributes that result in the formulation of a companyÆs business strategy. At Southwest, a SWOT analysis and an understanding of managerial values provide clear insights about the strategies this airline has employed and continues to use to gain a sustainable competitive advantage over its rivals. Specific information is provided below:

Low operating costs. While a lot of factors contribute to SouthwestÆs historic low cost advantage, the primary driver is the productivity of its employees.

Southwest has the lowest costs adjusted for stage length, on a per mile basis, of all of the major airlines. Among the factors that contribute to its low cost structure are a single aircraft type, an efficient, high-utilizatio

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to scan the environment and failed to appreciate that their business models, which are quite similar to each other, do not work effectively in a deregulated environment. All three of these airlines failed to react as Southwest and other no-frills airlines such as America West began to take market share from them. Each of these three airlines failed to appreciate a fundamental shift in the external environment involving business travel. Each of these airlines wants and needs frequent business travelers willing to pay full fare for short notice business trips in order to be profitable. All three airlines failed to note a fundamental shift in business travel away from this type of business travel. An article in Marketing (2004) suggests that there is likely to be a number of U.S. carriers that go bankrupt in the next year, and that the key to survival for many airlines will be to focus on losing as little money as possible, rather than trying to focus on revenue and profit growth. This is an example of how important it is for other airlines to do more environmental scanning and carefully evaluate every flight and every destination and determine which flights should be reduced in number, and which could be eliminated (2004). Reg
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Approximate Pages = 12 (250 words per page)

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