CriticalTasks of the Strategic Management
CriticalTasks of the Strategic Management
Strategicmanagement is an essential practice for all firms which aim tocontinue its operation in a foreseeable future. As such, it iscrucial that the management evaluates all internal and externalfactors in order to come up with the opportunities, threats,strengths and weaknesses that the company faces. As a result, thecompany will be able to forge the best way forward to ensure itscontinuous operations and profitability. This paper will focus onstrategic management practices that are used by Southwest Airlinesand suggests further improvements that can be put in place in orderto beat its competitors.
Thegoal of a mission statement is to define the purpose of a company. Itis a statement giving a reason as to why someone or something is inexistence. Southwest Airlines’ mission is “dedication to thegreatest quality of Customer Service delivered with a sense ofwarmth, friendliness, individual pride, and Company Spirit”. Itfurther states that it is committed to providing its Employees with astable work environment while giving equal opportunities for personalgrowth and learning [CITATION Cam101 l 1033 ].
Amission statement as such is like a North Star. It gives a companythe perspective as to where it is heading. The mission statementensures that the company is headed towards the right direction. Sucha mission statement is a precise umbrella statement that explains whya company does everything it does [ CITATION Mou13 l 1033 ].
TheFederal Administration Authority has a mission statement to supportits functionality. That is, “To provide the safest, most efficientaerospace system in the world.” They also have a statementoutlaying that they “strive to reach the next level of safety,efficiency, environmental responsibility and global leadership.” Bysuch statements, they affirm their position in the airline industryand promise the American citizens that they are accountable to allstakeholders [ CITATION Sou13 l 1033 ].
Analysisof the Internal and External Conditions.
Theinternal environment offers the strengths and weaknesses of a firm.Southwest Airlines increases its competitive advantage via itsstrategic abilities. These abilities are as a result of its numerouscompetencies and resources. Resources are unique intangible andtangible assets owned by the firm company while these competenciesare ways through which the company uses its knowledge to create acompetitive edge or advantage (Johnson et al. 2008). By having thesecapabilities and resources, the firm can appropriately respond to theexternal environment. These internal factors can be controlled,unlike the eternal factors which pose opportunities and threats [ CITATION Cam101 l 1033 ].
Theairline has financial strengths which aid it in achieving its goals.It has been able to grow and expand at a very fast rate. Itsfinancial power has also enabled it to offer credit facilities whichare core to maintaining its customers [ CITATION Mou13 l 1033 ].
Thefirm has adopted a marketing approach which is based on low tariffcharges which give it a competitive advantage over its rivals. Byoffering the reasonably low prices complimented by quality employeeservices, the firm has become a leader in the airline industry.However, this creates a weakness in the company activities. This isbecause, despite the high demand for airline services, the companycannot reap the benefits of charging higher prices [ CITATION Cam101 l 1033 ].
Thisrefers to the nature and level of competition in the airlineindustry. Southwest Airline exists in a highly competitive industrywhich is characterized by mergers and acquisitions. Airlines thathave merged have the luxury of offering passengers the ability totravel to various cities in the US while also connecting them toother continents of the world which they did not provideindividually. Moreover, as new rivals emerge, such as the AllegiantAirlines and JetBlue Airways, they pose a threat to the market sharedominated by Southwest Airlines [ CITATION Cam101 l 1033 ].
Inthe American Aviation industry, there exist barriers to entry. Thiscan be associated with the high capital requirement for investmentpurposes. While also considering the existing low-profit marginsattributed to price wars, making abnormal profits has becomedifficult. New entrants thus face a stiff challenge thus creating anopportunity for Southwest to maintain and possibly increase itsmarket share. Another entry barrier favoring Southwest Airlines isthe reduced availability of slots for landing at various US airports.These slots are reserved by the already established airlines thus newentrants are not able to obtain spots easily [ CITATION Cam101 l 1033 ].
SouthwestAirline faces threats posed by substitutes. These substitutes includetrains and ferries which can be used to travel long distances. Often,these alternative means of transport are cheaper. However, despitethe options, air travel remains to be the most convenient means oftransport, and as such, Southwest Airlines can serve a significantmarket share. Air travel has the full advantage regarding time.Hence, the threat of substitute is moderately low [ CITATION Sou13 l 1033 ].
MarketConsolidation and Penetration
SouthwestAirlines can consolidate its existing routes and also increase marketshare on these routes. It can also exit those non-profitable routes.
Consideringthat it already incurs small operating costs, Southwest can improveits income to overcome the challenges from operational costs.Southwest Airline should entice more high-end travelers by givingmore amenities and perks.
Theairline should take up newer but long distance destinations. Thiswill enable Southwest Airlines to compete directly with full-serviceairlines such as Continental and United. A merger with anothercompeting airline can be a way of improving its services while alsoincreasing its income.
Successof the Strategic Process
Thesuccess of these strategic actions can be reflected by the ability ofthe Airline to counter its competition. Furthermore, it has been ableto adapt to both its internal and external environment. By the use ofthese strategies, Southwest has been able to maintain its marketshare while also maintaining its profitability. These strategies area basis for future operations since the better the strategies, themore assured a firm is of continuous performance and profitability [ CITATION Sou13 l 1033 ].
ProductPositioning. Both Jet Blue and Southwest Airlines can carefullyproject their image in this competitive industry in order for theircustomers to differentiate their products from those of othercompetitors. They can positions themselves by taking advantage of allmarketing communications by advertising themselves as the only highfrequency, low-fare, point-to-point, and short-haul carriers in theUS. Their low-priced fares are a brand equity. This in a mathematicalsense makes them the only major carriers with a score that is strongon this particular attribute as based on customer research [ CITATION Sou13 l 1033 ].
PricingStrategies: By having a clear customer focus, the two airlines canadapt a pricing strategy of charging the lowest possible fares thatstill enables them to make a profit. This will reflect on theirdecisions to not only compete with other airlines, but with all otherforms of transportation, including the automobiles [ CITATION Mou13 l 1033 ].
Airlinesare notoriously known for increasing costs. To counter this, Jet Blueand Southwest can cut costs as opposed to providing overheads to itscustomers. This will allow these airlines to keep their customers,who prefer the low-cost alternatives.
Companiescan study the marketing strategies of Southwest and improve theirproducts and pricing, promotions and distribution strategies in orderto strengthen their competitive positioning. Southwest benchmarkingcan help firms to design strategies that can be used to build futurecustomer relationships. Furthermore, they can reduce theiroperational costs create community support and thus improveprofitability.
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Mouawad, J. (2013). Pushing 40, Southwest Is Still Playing the Rebel. Retrieved from New York Times: http://www.nytimes.com/2010/11/21/business/21south.html?pagewanted
Southwest. (2013). Southwest Airlines One Report. Retrieved from http://www.southwestonereport.com/_pdfs/2010SouthwestAirlinesOneReport.pdf