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One thing that really impressed me about Southwest was their ability to maintain high profits and maintain a high customer base even after

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Introduction

1. What three things impress you most about this company? One thing that really impressed me about Southwest was their ability to maintain high profits and maintain a high customer base even after the September 11 attacks and 2002 recession. Another impressive attribute is the fact that they can keep their prices very low and affordable to customers. The last thing that really impressed me about Southwest Airlines was their management system. Their motto that employees are equal to upper management seemed to me a risky approach, but for Southwest it was a very brilliant and profitable idea. 2. Do a SWOT analysis. (See Exhibit 1 for analysis) STRENGTH * Major profitable airline company since September 11, terror attack * Lower prices than competitors * Friendly service * Short air travel between two cities * Upside-down pyramid management system * Plenty of daily flights * Entertainment for passengers WEAKNESS * Only flies to 29 states * Cannot compete with larger airline companies * Does not utilize a hub system * No first class seating * Smaller seats compared to larger airline companies * Only uses Boeing 737 Airlines OPPORTUNITES * Slash Prices even more to eliminate competitors * Add first class compartment * Expansion into new geographic region * Add flights in areas where rivals were cutting back service * Expand airline fleet to fly longer distances * Add longer, non-stop flights THREATS * New entrants * Increased rivalry * FAA rules and regulations * Government Regulation * Land-based travel such as Amtrak and Greyhound * Other airline companies duplicating Southwest Airlines' strategy 3. What grade would you give Southwest management for the job it has done in crafting the company's strategy? I would give Southwest management an A grade, for the reason that Southwest Airlines is described as an upside-down pyramid. The upper management is at the bottom and supports the front line employees, who are the experts. ...read more.

Middle

Possible reasons for this move would be to eliminate the weakest competitor in the industry, which would free up the market held by that company. The reason for the creation of Southwest Airlines started when its founders saw an opportunity. Frequent trips between cities were exploited by providing a quicker form of transportation. Southwest Airlines has weathered through several crises and has proven itself to have potential to be a leader of its industry. The poor economic conditions have placed many airline companies in debt, while Southwest Airlines was able to make a profit. With its competitors weakened, Southwest can take the initiative and expand--not foolishly, but with the same drive and precise execution the company was founded under. The genius behind Southwest Airlines' success is location; and if researched properly, this can be applied to other areas. The appeal of Southwest Airlines is the cheap tickets, as they offer none of the luxuries such as in-flight meals. Southwest Airlines' no frills approach may not be pleasing to all; it would be good for Southwest to make a few changes in which the aesthetics would be more accommodating. Upgrading seats may be a costly venture, but it would open Southwest Airlines to a larger market. The medium of choice for customer referral is the internet. Internet referrals have been the main source of customers; it further cut costs by charging a smaller fee to book seats through the internet than through a travel sales agent. With the saturation of discount websites, however, Southwest Airlines is losing the grip it held by advertising on the internet. More websites offer competitive rates and special discounts, which, if Southwest Airlines does not take immediate action, can end up losing customers. Since advertising through the internet is risky, as people hate pop-ups or spam e-mails, it is our general consensus that Southwest should find ways to be listed on these price comparison websites. ...read more.

Conclusion

They base their model on the motto, which states that "if they're happy, satisfied, dedicated, and energetic, they'll take really good care of the customers. When the customers are happy, they come back. And that makes the shareholders happy," Southwest has very good relations with all their employees. Employees are either from independent unions or have flexible contracts that allow employees to work longer hours. Southwest Airlines, however, is not without weaknesses. No matter how successful, Southwest Airlines serves only 29 states and cannot compete against the bigger companies that serve nationally or even internationally. Furthermore, Southwest Airlines does not utilize a hub system that allows for bigger competitors to reach further out. Such competitors are aware that they cannot match Southwest Airline's prices; their market is larger and does not allow the ability to offer cheaper tickets at the cost of no in-flight meals. Instead, competitors narrow the price difference between Southwest Airlines and themselves and stress the quality of these frills (such as roomier seats). Others, through use of flight hubs, are the only ones who can economically serve remote customers. Another weakness of Southwest Airlines is its preference for Boeing 737s. Being limited to one type of airplane leaves them with little flexibility when the model receives a bad reputation or a critical flaw is discovered. Such would be a costly venture for this company, who has used only one type of airplane, and in the face of a dire situation would face a costly venture of finding replacements or counteracting bad publicity. A possible threat is that since Southwest Airlines' strategy has proven so effective, it will be duplicated by its competitors to a point where it would lose originality. This could result in competitors offering low rates to the areas covered by Southwest and beyond, making Southwest Airlines' range and limitations more obvious. It would be very possible in the near future where a big company, with its hubs (something Southwest does NOT have), would basically introduce Southwest Airlines' low-cost model to a wider market, encroaching and outdoing Southwest Airlines. ?? ?? ?? ?? 1 ...read more.

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