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SOUTHWEST BUSINESS-LEVEL STRATEGY AND THE IE MATRIX 1

Southwest Business-Level Strategy and the IE Matrix

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Learning Activity #1

A company’s core competencies should be geared towards meeting customer needs and or preferences to attain above average returns. And to achieve this, organizations utilize business level strategies. Southwestern operates in the airline industry, which is a very competitive industry. With its strengths, weaknesses, opportunities and threats, the company should employ a generic business-level strategy that is best suitable for the organization to keep it in a competitive position. The best business level strategy for Southwest Airlines is an integrated low-cost/differentiation strategy. As mentioned previously, Southwestern Airlines is a low-cost airline that concentrates on fast, no-frills service (Gittell, 2014). Besides, it flies only Boeing planes, does not serve meals, and does not provide special seat reservations. By employing the low-cost/differentiation strategy, the company will be able to attract many customers who are price-sensitive and in turn, realize higher returns than their competitors most of which charge higher prices. If the company draws high passenger traffic due to its low-cost, it will also be able to survive even during the hard economic times, which means it will be able to maintain consistent earnings. Also, employees will be content with regular income, however, less. Satisfied employees mean incredibly loyal employees, and when the employees enjoy their job they will also mean excellent customer service, which leads to happy and loyal customers and this ultimately will be at the advantage of Southwest (Bhandari & Verma, 2013).

Moreover, the company should embrace a differentiation strategy which would make them stand out or exhibit some unique characteristics from those of their competitors. An example of a differentiation strategy is a customer reward program. This is a program which will enable members to redeem their points for every available seat on a regular basis, for example, every day or on every flight. It is worth noting that many other airlines have the same program, but most of those are very complicated. To stand out, Southwest will emphasize on flexibility. They will also ensure that the same are available to their customers and do not expire as long as the member has points-earning activity during a set period, such as in a period of 24 months. This program will pay off, as it will lead to overall increased business and keeps the company geared towards their customers’ needs. Another important differentiation strategy that Southwest should embrace is an aggressive promotion. The company will create their key messages and incorporate them into easily understandable commercials. The commercials will among other things display the company’s low-cost strategies, such as “bags fly free!” This will keep the strategies do the talking and sets the organization apart from its competitors and makes prospective customers aware of Southwest’s distinct approaches.

Learning Activity #2

IE Matrix

The total weighted score on the EFE matrix is 2.22, while the total weighted score on the IFE matrix is 2.91. The IFE score of 2.91 points at a company with an above average internal strength, while EFE score of 2.22 suggests a slightly less than average ability to respond to external factors. As indicated in the matrix, Southwest is in cell V which suggests the hold and maintain the strategy. According to Bhandari & Verma (2013), this implies that Southwest should embrace those strategies that focus on increasing market penetration and product development.

References

Bhandari, A., & Verma, R. P. (2013). Strategic management: A conceptual framework. New Delhi: McGraw-Hill.

Gittell, J. H. (2014). The Southwest Airlines way: Using the power of relationships to achieve high performance. New York: McGraw-Hill.