bus 499 assignment 3

Southwest Airline Strategic Management

Alicia Harris

Brian Grizzell

BUS 499

04/06/2018

Globalization and Technology

Globalization is the process by which companies or other organization initiate a universal influence or begin operating beyond their national scale (Bernardo & Fageda, 2017). In the modern business industries, globalization has become a critical factor and a driving force. Various elements such as culture, environment, policies, production, and technology have contributed to the success of international interactions. The technology and globalization have significantly contributed to the advancement of the airline industry (Eroğlu, 2015). It is due to globalization that most U.S airlines have evolved into a great and profitable industry. Airline industries have an advantage of diversification via its international investment, economic growth, tourism, and trade. It is due to the progression of technology that major U.S airlines like Alaska Airlines, Delta Air Lines, Frontier Airlines, JetBlue and Southwest Airlines have been able to increase ticket availability to customers through internet and e-commerce (Bernardo & Fageda, 2017). With the use of modern technology, Southwest Airlines has made it easier for international passengers to book their flights through the Airline’s portal. Unlike in the past, technology has made it easier in the airline industry, and passengers do not have to use travel agencies when booking travel. Also, Southwest Airline allows travelers to book their tickets via independent websites to counter third-party competitors. The advancement of technology has effectively reduced the cost of paperwork due to use of agencies, but it has unfortunately reduced some employment positions in the airline industry (Bernardo & Fageda, 2017).

Application of industrial organization model and the resource-based model

After the introduction of Airline Deregulation Act of 1978, most airlines have been having numerous years of low profits. The act introduced many changes which resulted in too many competitions in the new market hence reducing the ticket prices as well as reducing the number of customers (Eroğlu, 2015). This allowed the Southwest Airline to have a new competitive and financial impact on their international market. Also, with the rise in the price of the fuels costs, the Southwest Airlines no longer became the first choice for local and international travelers. The high cost of fuel price is the determining factor when the airline is preparing and planning travel tips since they reflect on the cost of tickets and customer service (Richards, 1996). There are several ways that the Southwest Airlines can evaluate their current practices and then analyze their present market strategy. The company needs to adopt a solid condition evaluation to identify any challenges in their current strategy and seek transformational solutions. Another important aspect that airlines need to understand and integrate is the internal properties of their strength and weakness of their service to customers (Eroğlu, 2015). Also, the utilization of the external market opportunities as well as threats can have a significant impact the developing a transformational strategy. In other words, for the Southwest Airlines to be successful, they need to find a way of minimizing cost while maximizing profit and still maintaining competitive customer care and quality services. Most airlines cut cost without reflecting it to the customer services like allowing to a certain amount of luggage to enter freely and checking luggage at the curbside instead of at the gate. By including such small cutbacks, the airline industry can have better service while still maintaining above average profits (Richards, 1996).

Assessment of the Vision and Mission Statement

Southwest Airline is a company that focuses on their mission and vision statement in their daily service. Garry Kelly, the Chairman, and CEO of Southwest airlines stated that their mission and vision is claimed that the company is always trying to do the right thing and the staff integrates the company’s core value in everything they do. The vision of the Southwest Airlines is to become the most loved, most flown, and most profitable airline. While the mission is dedication the highest quality customer care service delivered with a sense of friendliness, individual pride, warmth and company spirit (Richards, 1996).

It is because of being driven by the vision and mission statement that the Southwest Airlines has received international recognition in the previous two decades. Whether there is a fluctuating demand in air transport or rise in oil prices, the company sticks to its strategy hence maintaining the quality care services at a standardized price throughout the year. Operating with the mission and vision statement in every situation is what makes Southwest airline have a competitive advantage and different from other competitors (Richards, 1996). Since they focus much on the customer experience rather than revenue generation, they always upgrade their flights to suit the modern trends. Customers spend billions of dollars to travel in air. Hence, Southwest Airlines honor them through their vision and mission by proper care to the customer, excellent accommodation and comfortable passengers experience throughout their flight (Yang & Xinde, 2014).

Most American Airports need more capital to include more terminal buildings, surface access programs, and airfield modification. Airports are faced with aging infrastructure and increased number of passengers hence they need more funds to modernize facilities, improve safety and advance the customers experience. To ensure that such projects are catered for, it is important for Airline companies to develop a vested interest in potential investors that can influence positive outcomes. Therefore, stakeholders play is integral to an Airline’s environmental stewardship.

Southwest Airline has both internal and external stakeholder including employees, tenants, government authority, local community, passengers, media, unions, and suppliers. Airports are naturally complex facilities with various stakeholders each having a unique objective. During their 40th anniversary, Southwest Airlines teamed up with the Student Conservation Union in developing 40 environment conservation projects in 25 different communities. The Airline also invited their customers as well as the public to take part of their projects in each location. The company claimed that their major aim for such project was not only to conserve the environment but also offer a perfect opportunity for their various stallholders to meet (Yang & Xinde, 2014).

Customers

Southwest Airlines is a very loyal company and has a large international and domestic consumer market due to their excellent services. Programs such as Rapid Rewards and A-list programs have contributed to their customer loyalty (Richards, 1996).

Employees

Southwest employees play a pivotal role in ensuring there is a smooth Airline operation. Because the employees are fairly paid, they tend to offer excellent care to customers. They correctly treat their customers while demonstrating a commitment to the company’s mission and vision statement (Richards, 1996).

Investors

Investors are among the largest stakeholders in Southwest Airline and play an important role in the expansion of the airline operation across borders. During the financial period ending 2015, Southwest Airlines was able to pay $1.4 billion to its investors consisting of dividends and stocks repurchase shares. The Southwest investors contribute to the modernization of facilities at the airport as well giving strength for the company to expand to a global market (Bernardo & Fageda, 2017).

References

Bernardo, V., & Fageda, X. (2017). Globalization, long-haul flights and inter-city connections.

EROĞLU, O. (2015). THE SUCCESS OF LOW-COST CARRIERS: THE CASE OF SOUTHWEST AIRLINES AND PEGASUS AIRLINES. Gümüshane University Electronic Journal of the Institute of Social Science/Gümüshane Üniversitesi Sosyal Bilimler Enstitüsü Elektronik Dergisi, 6(12).

Richards, K. (1996). The effect of Southwest Airlines on US airline markets. Research in Transportation Economics, 4, 33-47.

Yang, D., & Xinde, C. (2014). Innovation Research of Enterprise Human Resource Selection----The Selection of Southwest Airlines. International Journal of Business and Social Science, 5(7).