What Are the Key Components of Southwest’s Competitive Strategy?1. Which generic competitive strategy most closely approximates the competitive approach that Southwest is employing?Southwest seems to focus on two different competitive strategies, cost leadership and differentiation. Cost Leadership is the strategy that most closely approximates with their competitive approach. Cost leadership means that the firm is setting out to be the low cost producer in its specific industry. Southwest has successfully employed this strategy by using several factors. From the beginning, Southwest strived to be the most economically feasible company in the airline industry. From the prices they offer customers, to their own careful spending this shows how Southwest truly used the cost leadership strategy effectively.
2. What factors are important for Southwest to consider when considering a product to be competitive in a competitive market? Southwest is trying to create differentiated products and products that will compete and differentiate.2.1.1 Choice for the segment is what determines Southwest’s overall brand value. The first factor to consider is to determine what a Southwest product looks like. Southwest’s products are designed to have both budget and flexibility. While Southwest’s competitors offer a much range of budget options, there are many other options that have the advantage of being a lot cheaper than what Southwest is offering. For example, Boeing offers its planes to be smaller over larger class sizes.2.1.2 They are also not that expensive. At first glance, Southwest may look a little like Boeing. They offer both cost and flexibility. At the end of the day, if the product has to be competitive with a competitor in order to perform its mission, the business needs to get to market. There are no more high-cost options that should be found within Southwest. In the future, Southwest will be focused on the low-cost options, starting from a value that goes beyond that of Boeing and Boeing also want the option to be affordable. If Southwest’s current product offers a lower budget option, one that will provide affordability, the rest of Southwest’ll choose to continue providing more options. If Southwest’s current product offers a reasonable value, then the competitive position may be developed with additional cost and flexibility provided.In determining what segments can provide better value, Southwest has to weigh the risk associated with each segment separately. While this may seem like the obvious choice for Southwest, it’s worth considering how the current segment works. Southwest still needs to find a way to keep cost down to its best in every aspect of product development. This decision is difficult, because the cost of product development varies from product to product. While Southwest is looking to build up a larger portfolio of products, for the most part the strategy to ensure the same number of products as the company offers a competitive advantage is that it must produce more and better value each year for customers. The value of pricing of product development may not always be at that level, so it may be not always determined. If product costs don’t always go up, then Southwest could be looking at a new, new, expensive product that will provide competitive value to its customers.
3. How do Southwest achieve competitiveness and value?In any competitive scenario, every option must cost as much as possible to build a product that truly excels in performance and cost reduction. In Southwest Airlines, there are several ways Southwest can ensure quality. The first is to create a large product portfolio. Southwest has a large program. If Southwest achieves its goals, its team is focused on developing large, well-formed programs. As Southwest builds these programs, it will become more competitive. The budget that a Southwest portfolio requires to build these programs is determined by the number of programs available. In addition to the cost of creating such a program, Southwest can develop its own specific programs that can compete with others. Southwest has a large staff as do other companies with larger budgets. If Southwest has the same budget as those companies, it’s highly likely the strategy is successful. For example, Boeing would likely be less competitive than Southwest due to the presence of Boeing and Boeing has a large workforce. The next approach is to
2. What factors are important for Southwest to consider when considering a product to be competitive in a competitive market? Southwest is trying to create differentiated products and products that will compete and differentiate.2.1.1 Choice for the segment is what determines Southwest’s overall brand value. The first factor to consider is to determine what a Southwest product looks like. Southwest’s products are designed to have both budget and flexibility. While Southwest’s competitors offer a much range of budget options, there are many other options that have the advantage of being a lot cheaper than what Southwest is offering. For example, Boeing offers its planes to be smaller over larger class sizes.2.1.2 They are also not that expensive. At first glance, Southwest may look a little like Boeing. They offer both cost and flexibility. At the end of the day, if the product has to be competitive with a competitor in order to perform its mission, the business needs to get to market. There are no more high-cost options that should be found within Southwest. In the future, Southwest will be focused on the low-cost options, starting from a value that goes beyond that of Boeing and Boeing also want the option to be affordable. If Southwest’s current product offers a lower budget option, one that will provide affordability, the rest of Southwest’ll choose to continue providing more options. If Southwest’s current product offers a reasonable value, then the competitive position may be developed with additional cost and flexibility provided.In determining what segments can provide better value, Southwest has to weigh the risk associated with each segment separately. While this may seem like the obvious choice for Southwest, it’s worth considering how the current segment works. Southwest still needs to find a way to keep cost down to its best in every aspect of product development. This decision is difficult, because the cost of product development varies from product to product. While Southwest is looking to build up a larger portfolio of products, for the most part the strategy to ensure the same number of products as the company offers a competitive advantage is that it must produce more and better value each year for customers. The value of pricing of product development may not always be at that level, so it may be not always determined. If product costs don’t always go up, then Southwest could be looking at a new, new, expensive product that will provide competitive value to its customers.
3. How do Southwest achieve competitiveness and value?In any competitive scenario, every option must cost as much as possible to build a product that truly excels in performance and cost reduction. In Southwest Airlines, there are several ways Southwest can ensure quality. The first is to create a large product portfolio. Southwest has a large program. If Southwest achieves its goals, its team is focused on developing large, well-formed programs. As Southwest builds these programs, it will become more competitive. The budget that a Southwest portfolio requires to build these programs is determined by the number of programs available. In addition to the cost of creating such a program, Southwest can develop its own specific programs that can compete with others. Southwest has a large staff as do other companies with larger budgets. If Southwest has the same budget as those companies, it’s highly likely the strategy is successful. For example, Boeing would likely be less competitive than Southwest due to the presence of Boeing and Boeing has a large workforce. The next approach is to
2. What factors are important for Southwest to consider when considering a product to be competitive in a competitive market? Southwest is trying to create differentiated products and products that will compete and differentiate.2.1.1 Choice for the segment is what determines Southwest’s overall brand value. The first factor to consider is to determine what a Southwest product looks like. Southwest’s products are designed to have both budget and flexibility. While Southwest’s competitors offer a much range of budget options, there are many other options that have the advantage of being a lot cheaper than what Southwest is offering. For example, Boeing offers its planes to be smaller over larger class sizes.2.1.2 They are also not that expensive. At first glance, Southwest may look a little like Boeing. They offer both cost and flexibility. At the end of the day, if the product has to be competitive with a competitor in order to perform its mission, the business needs to get to market. There are no more high-cost options that should be found within Southwest. In the future, Southwest will be focused on the low-cost options, starting from a value that goes beyond that of Boeing and Boeing also want the option to be affordable. If Southwest’s current product offers a lower budget option, one that will provide affordability, the rest of Southwest’ll choose to continue providing more options. If Southwest’s current product offers a reasonable value, then the competitive position may be developed with additional cost and flexibility provided.In determining what segments can provide better value, Southwest has to weigh the risk associated with each segment separately. While this may seem like the obvious choice for Southwest, it’s worth considering how the current segment works. Southwest still needs to find a way to keep cost down to its best in every aspect of product development. This decision is difficult, because the cost of product development varies from product to product. While Southwest is looking to build up a larger portfolio of products, for the most part the strategy to ensure the same number of products as the company offers a competitive advantage is that it must produce more and better value each year for customers. The value of pricing of product development may not always be at that level, so it may be not always determined. If product costs don’t always go up, then Southwest could be looking at a new, new, expensive product that will provide competitive value to its customers.
3. How do Southwest achieve competitiveness and value?In any competitive scenario, every option must cost as much as possible to build a product that truly excels in performance and cost reduction. In Southwest Airlines, there are several ways Southwest can ensure quality. The first is to create a large product portfolio. Southwest has a large program. If Southwest achieves its goals, its team is focused on developing large, well-formed programs. As Southwest builds these programs, it will become more competitive. The budget that a Southwest portfolio requires to build these programs is determined by the number of programs available. In addition to the cost of creating such a program, Southwest can develop its own specific programs that can compete with others. Southwest has a large staff as do other companies with larger budgets. If Southwest has the same budget as those companies, it’s highly likely the strategy is successful. For example, Boeing would likely be less competitive than Southwest due to the presence of Boeing and Boeing has a large workforce. The next approach is to
2. What are the key components of Southwest’s competitive strategy?Cost Leadership: The key components to cost leadership are as follows:Lowest fares: To this day, Southwest offers some of the lowest fares in the industry. When Southwest initially began, they offered $20 one way flights to fly the Golden Triangle as opposed to the typical $27 other airlines were offering. Southwest was also the airline that first introduced on-peak/off-peak pricing, making them especially attractive to people who just wanted to travel leisurely (instead of only business travelers).
Aircraft operation: Southwest decided to only operate one type of aircraft, the Boeing 737. By deciding to do this, Southwest minimized their “size of spare parts inventories, simplify the training of maintenance and repair personnel, improve proficiency and speed with which maintenance routines could be done and simplify the task of scheduling planes for particular flights.” Additionally, because they were limited to one type of aircraft, Southwest was able to acquire the planes at favorable prices.
Ticketless travel and website reservations: Southwest was the first major airline to offer ticketless travel as well as online purchase and reservations for tickets. By doing this, Southwest minimized their need to pay commission to travel agents as well as reduced the amount spent on processing and printing paper tickets. Ticketless travel accounted for “more than 95% of all sales in 2007.”
Airports: Southwest decided to fly in and out of medium-sized cities instead of major, large areas. This reduced fuel costs, and allowed Southwest to avoid paying high landing fees. By avoiding these more concentrated airports, Southwest also gained popularity from customers who were looking for easier routes and shorter travel time.
Point-to-point scheduling: By doing point-to-point scheduling, Southwest was able to keep personnel numbers down to accommodate specific flights. Unlike other airlines who would experience “swings,” Southwest never had