:::Case study exam::: Answer the given question based on the attached case study. Use the textbook content to show your supportive arguments. (Textbook attached) Use the analysis (such as PESTLE, SW

Introduction

Southwest airlines are one of the cheapest airlines which is located in Dallas. This airline has an average of six thousand workers and it is able to operate more than four thousand departures in a day when it is peak season. This airline is known too cheap because it doesn’t offer meal or it doesn’t offer luggage transfer.

Question 1

The basis of Southwest's competitive advantage and the challenges to strategy can get determined by analyzing the SWOT analysis. The analysis gives us the strengths and opportunities which are the basis of competitive advantage and the threats and weaknesses as the challenges to strategy.

Basis of Competitive advantage; The airline has several strengths that have enabled it to stay ahead of the competition over the years. Southwest airlines have successfully been able to offer low cost as there are certain features which other airlines provide, but they do not. Features such as in-flight meal, reserved seating, baggage transfer etc. Having no in-flight meals reduces cost and time in terms of aircraft cleaning between each trip. This strategy makes the turnaround time between each trip very short which ultimately helps with timely departure. Moreover, Southwest airline is famous for is the level of customer service. The employees are well-trained and equipped with interpersonal skills that allow them to relate well with customers. They emphasize for candidates’ good attitude more than skill set. They prefer to hire people who can show the passion for the role and willingness to work ha hark hard work hard. Most customers go back to the same airline because they feel valued. Besides that, the airline is very useful. The flights are always on time; therefore, clients who hope for fast and uninterrupted flights opt to use South West. The company's opportunity comes in the ability to expand the market into Dallas, Houston and San Antonio. This is a chance for the airline to boost revenues and grow further.

The challenges that face the airline’s strategy; There are weaknesses to the airline that limit optimization. One of its major weaknesses is its pricing strategy. Understandably, the airline seeks to woe more customers by having a low-price range. However, this strategy is questionable because it jeopardizes the revenue-making prowess. Southwest faces potential challenges of Ultra Low Cost Carriers (ULCC) who are willing to offer even lower base fare to customers. If Southwest airlines cannot compete with such ultra-low cost airlines, it may end up defeating its important point of differentiation. The price should be set considering the fuel prices and general maintenance costs the airline incurs on all its aircraft. The threats are also a significant issue in the strategy of choosing the airline takes. In addition, based on U.S airlines ranking reports, Southwest poses potential challenges in terms of higher consumer complaints, 2-hour tarmac delays and sometimes extreme delays. The basic threat is strong competition in the air travel business. Several high-quality players want a share of the market as well. Besides, there are perfect substitute means of travel that consumers can opt for other than air travel only.

Question 2

Southwest Airlines does not lack resources that give it a competitive advantage over other airlines. These resources exist in two forms; Unique and Threshold resources. These resources are both physical and non-physical.

Unique resources

The tangible aspect is the incorporation of AirTran in the operations of the airline. This strategic decision increased the marketability and efficiency of South West exponentially. From the non-physical point of view, the company has established a phenomenon brand image. To any organization that deals with customers, the brand image is crucial. The opinion of clients about Southwest is impressive. The airline also has effective leadership that has played a good role in decision making and policy formulation. Good leadership is invaluable.

Location, routes, operations

These internal resources and assets factors which are giving competitive advantage are location, routes, and operations. Airlines prefer less popular and less busy airports. This strategy lets airlines save tons of money from airport fees and let them keep all their scheduled flights on time and let the operations run efficiently. As mentioned in the case study, Southwest airlines offer certain point-to-point flight routes (hub-and-spoke) that are not being offered by its competitors. Southwest’s fuel-hedging technique also helps airlines save money.

Threshold resources

The airline from commencement and growth has always had a strong financial base. Capital is a tangible asset essential in such an industry that requires a lot of capital to start and operate. Due to this financial muscle, the company has acquired fleets of airplanes that are of quality. Other than the tangible aspect, there is the non-physical bit where the human resource, especially, plays a significant role. The airline has a motivated and inspired human resource. The quality of customer service also goes without question.

Question 3

There are industrial and general forces that affect the airline's strategy choice. For the Industrial forces, we use Porter's five forces and the General; we use PESTLE Analysis to determine the forces.

General forces; The PESTLE analysis

The political and legal factors can get grouped under one roof. In this area, the airline receives obligated to comply with the country's aviation regulations. The Federal Aviation Administration monitors the company to ensure compliance. South West has severally got caught up in legal battles with the government, which is not beneficial for the company image and operations.

Economic factors have an impact on the revenue the airline generates. The costs of fuel are the central issue in this area. When fuel costs are stable, the airline does a better job. In the event of economic hardships, air travel is the worst hit because people chose the substitutes over the airline to save on costs.

The social factors in the case of South West relate to how the company handles its customers. In Southwest culture, the employees get well trained in customer care and relations. They are treated better, and the high level of customer service is a major highlight of the company. It is a strength that keeps it ahead of the rest.

Technology is a diversified field. The airline has always endeavored to acquire and integrate the recent technology in offering its services. One of the most notable incorporations is the use of communication technology to update clients on the services constantly. The airline has an online platform that allows it to make reservations and monitor booking online. This is an acceptable practice.

To the environment, the airline, like all others, is mandated to ensure their aircraft are frequently serviced and maintained to reduce cases of emissions. Emissions are harmful to the environment, and this contradicts environmental regulations.

For the Industrial forces, we briefly look at Porter's Five forces. The competition in the airline business is stiff. It has been made worse by the mergers and acquisitions of smaller competitors to form a strong rival. The industry also has strong barriers to entry because of the capital required to start and continue operations. Besides, the threat of substitute means of transport like water, road and rail is also growing. If customer preference shifts to these other means, it may be tragic. The airline suppliers have changed from Boeing to Airbus; with this change comes costs of training pilots and engineers, which is very expensive. Buyers' bargaining power influences prices. If prices are too high, the company can lose customers to competitors.

Question 4

The airline can invoke strategies to grow and develop further. International expansion can open more opportunities for the airlines and help in generating more revenue by attracting more travelers. The most effective strategy is market penetration and development. The company is yet to serve the whole market. There are areas that it can spread its operations. The airline can also pursue product development; this is where the company seeks better suppliers of aircraft and improve the quality of aircraft it uses. The quality of aircraft is essential because customers want to travel in comfort and receive value for their money. Lastly, the company should ensure they diversify their operations. The flights can be domestic and international as well. The services should cut across social groups, with prices that range depending on the selected package.

Question 5

The airline’s leadership is effective but has room to improve. The effectiveness can be proved by the fact that the airline has been generating profits over the past years. It is only possible to achieve this financial accomplishment with good leadership. The quality of strategy employed as well shows the airline is doing well. Kelleher leadership helped airlines build a positive and successful brand image as well as made employees love the brand and encourage to perform well. Kelly leadership lead airlines enter and grow into new international markets, acquisition of AirTran Holding Inc. and offer new facilities to attract more customers. Both the leadership styles have made positive impact on the growth of Southwest airlines. However, the leadership can still improve and develop a better plan to reach to the untouched markets it has not ventured in yet and develop a luxury experience for the customers who seek to travel that way.