STRATEGY IMPLEMENTATION AND MEASUREMENT METRICS
ASSIGNMENT-1 SOUTHWEST AIRLINES CASE STUDY
QUESTIONS 1. How does Southwest Airlines get its competitive advantage? 2. How does Southwest Airlines execute its strategy?
1. How does Southwest Airlines get its competitive advantage? Southwest Airlines uses a Cost Leadership Strategy, however most pricing strategists would agree that having a low price does not, in itself, constitute a competitive advantage. In fact, thinking that low prices are always a good strategy for competition is deeply misguided. However, at times, targeting low prices can lead to a strategic focus which delivers tremendous results. Modern competitive strategy will often examine firms from a resource-based…show more content… No first class: One-class service.
Does not fly into major airports: or uses Use of underutilized airports that are less major airports concentrates on point close to metropolitan cities: reduced to point connections costs, punctuality Use of multiple aircraft types Frequent flyer program does not use miles earned Uses fuel efficient 737s: reduces maintenance and training costs Based on number of trips flown: reduced operating costs
From this list, we see a number of items which an airline would usually use to define superior value removed from Southwest Airlines offer. A Southwest customer couldn’t be treated to first class, couldn’t get food, couldn’t book them as part of a larger trip, couldn’t book with them through an agent, and couldn’t even preselect their seat. All
of these features were exactly what defined a competitive airline at the time. And, all of these features added cost. Instead, Southwest Airlines selected a specific target customer — a Texan traveling between cities in Texas — and then determined what it would take to satisfy that customer. That customer was far more interested in travel efficiency than travel class. That customer would be glad to forgo a meal, especially in exchange for a friendly flight attendant and a Dr. Pepper. That customer was trading off driving for flying, and needed flexibility in booking rather than navigating through the decisions and planning related to yield