1. What is Southwest’s strategy ? What is the basis to build its competitive advantage?
Southwest’s strategy is to improve efficiency and pass cost saving to its passengers by offering them low prices.
The basis on which Southwest builds its competitive advantage is putting employees first, this will make them take real care of customers. It record as the first in the industry in the term of customer service and customer satisfaction based on some conducted surveys. Its strategy is valuable, rarely done because its difficulty to manage, hardly to imitate and organized well by the whole employee from pilot, gatekeeper, cabin crew, ground crew that committed to the company. The employee have one goal congruence with the company’s goal.
The Southwest Airlines strategy is keeping costs low and treating employees well and a commitment to managing the company. The employee happy and they give the best service that will give satisfaction to the customer.
There are two main strategic areas: a. Operating Costs
Southwest Airlines has the lowest fares among its competition. Its lowest fares partly came from low operational costs.
Here are the source of cost savings: * Using only one kind of airplane that is ‘Boeing 737’ while competitors are using all kind of airplanes and models. That saves millions for Southwest in maintenance cost, spare-parts inventories and mechanics training. More, every pilot and crew members will be familiar with every plane. On the other hand, using one type of airplane gives Southwest the opportunity to move the aircrafts through the route network without costly reconfigurations. * Using less congested airports (secondary or downtown) thus they have lower average fares. Most of Southwest flying is point-to-point rather than competition that is hub-and-spoke. That strategy and short haul approach with an average flight time of 55 minutes