Southwest Airlines Swot

Southwest Airlines

The beginning of the Southwest case focuses on how tough it is to survive in the airline industry as a corporation. The case then goes on to explain how Southwest Airlines has been able to successfully outperform other airline competitors for over a decade. Through hard work, innovation, and a warm attitude Southwest has been able to crush the competition for years. However, it is clear from the case that dramatic changes within the airline industry are imminent. With these changes on the horizon the case ask whether you think Southwest will be able to maintain its position in the market, and what your recommendations are? The purpose of my paper is to first give you an analysis of Southwest's strategy. I will discuss the company's strategy, and then evaluate the strategy by preforming a SWOT exercise. I will follow this up by stating whether the strategy chosen by Southwest has led to any Sustainable Competitive Advantage (SCA). After my analysis of the company, I will give my recommendation on what I think Southwest should do and why.

The case starts by giving you an overview of the airline industry, and how tough it has been in the past for corporations to survive within the industry. The case then gives a brief overview of Southwest's Airlines history, and proceeds to explain how for years Southwest has been so successful. To properly understand how Southwest's has been able to achieve this we must analyze the company's strategy. However, before we can analyze Southwest's strategy we must first figure out exactly what it is. To answer this question, we will use the Strategy Diamond of Hambrick and Fredrickson which focuses on Arenas, Vehicles, Differentiation, Staging, and Economic Logic. This model will help us understand exactly what Southwest's strategy is and how it works. The first two questions to answer are what Arenas will be used by the company; and how will the product be differentiated from competitors? In the case, it states that Southwest's focus was on short-haul flights. Southwest's strategy was simple it would service three routes all within Texas. Southwest chose a small segment of the market to service giving the company plenty of room to expand in the future. The next question to answer is how Southwest Airlines would be differentiated from other airlines? The main answer to this question is price and service. Southwest's chosen strategy has given it the ability to charge much lower prices than competitors. Along with lower prices the company also provides high-quality friendly service to its customers'. The combination of these two differentiating factors really help Southwest stand out among competition. The Vehicle or process that Southwest uses to expand is very methodical and thought-out. If Southwest wanted to expand it was pretty easy. All the company had to do was pick what city it wanted to service, and that was basically it. However, unlike other airlines, Southwest was able to avoid the trap of growing beyond its means. Southwest often had more opportunity to grow and expand, but it never lost focus on the company's original strategy. By staying on track and only focusing on point-to-point flights I believe Southwest was able to avoid many pitfalls. Staging and Pacing refers to the sequence and speed of strategic moves made by a company. For Southwest the Staging and Pacing process was relatively slow. The company has steadily expanded since its inception, but as I alluded to earlier the process was very methodical and thought-out meaning expansions just didn't happen overnight. The last question to answer is Economic Logic or how will all these pieces fit together to earn profit for the company. The answer to this question is a combination of all the questions answered previously. The company plans to earn profit by servicing limited routes, multiple times a day with relatively little delays combined with low prices and exceptional service.

Now that we understand Southwest's strategy, we must now decide whether this strategy leads to SCA for the company. To decide whether SCA has been created by Southwest I will use a SWOT analysis. The SWOT analysis will look at the Macro-environment of the firm and the industry, which will help identify threats and opportunities of the company as well as the internal strengths and weaknesses of the company. To start, let's look at the Opportunities and Threats that Southwest faces based on the external environment of their industry. The first thing to look at is competition. There is competition within the industry from bigger airlines; however, these companies struggle to beat Southwest's prices and superior service. Next let's look at barriers to entry for the airline industry. The industry appears to have high barriers to entry. The biggest barrier into this market in my