The Southwest choose a low-cost strategy. For attract price-sensitive customers. Companies usually choose a lower price among domestic airlines markets. Although the single price of products lower than before ,as the volume of buyers in great enough numbers, total profits increased without any doubt. Southwest Airlines tend to exploit a low-cost advantage to gain much more market share-by attacking competitors with a lower price. Equally ,the rivals may counterattack with the same method . They stick to use Boeing 737 aircraft only, for cost-saving consideration. Narrow down the inventory space, and improved the efficiency of training process and maintenance .Striving to Point-to-Point route structure strategy, with this strategy , Southwest Airlines could minimize the aircrafts waiting time within 25 minutes.
Southwest Airlines dropped out the high-profit European airlines . They aim to the unknown market space, without too many rivals , they have no need to flight for the limited market shares, But to seek the new demanding .Everything need to be created ,compared with the completely operated areas , the market space is eagerly to be explored. It is much more easier to take a position in free markets with lots of competition.
On the contrary ,Red oceans Strategy almost exist in the every industry. Companies are trying to defeat rivals,and grab a greater market share.As competition becomes more intense, producers find out that they are less likely to promote profits .
Instead, blue ocean strategy proposes finding value that crosses conventional market segmentation and offering value and lower cost. Educator Charles W. L. Hill （1988）proposed that a combination of differentiation and low cost might be necessary for firms to achieve a sustainable competitive advantage.
Two core values were deeply permeated in Southwest ,that is Luv and Fun. LUV —means treating customers and employees with fully respect and dignity. Fun—-emphasized the importance of working environment with entertainment . Besides these vital elements , Southwest Airlines also made some contribution to culture-building. For instance,the corporate culture committee creation.This committee make several efforts towards the company—to hold 4 full-day meeting per year. Apart from those committees or organizations ,other cultural related activities were hold ,it enabled employees to get rewards and help them to find much more meaningful things. With the analysis of Southwest Airlines ,it is indeed a corporation with strong culture .To foster a higher labor productivity ,The southwest airlines emphasize the importance of employers. “At southwest, our people are our greatest assets .”They offered a large amount of opportunities for their employers. With the daily report ,it arises employees’ awareness.Among chief domestic competitors , Southwest Airlines occupied a favorable position. With so many measures and strategies get implemented, we can infer that Southwest Airlines get less complaints from passengers. The price-sensitive passenger were more satisfied with the flight when they take
From the exhibit 2 we can summarize that the Financial operating performance of Southwest Airlines is raised rapidly during 2009-2013. What is more, the volume of passengers boosted , so as the frequency of the flights. When Herb took the lead position ,the shareholders won the larger profits than before, it was illustrate clearly the transformation from the exhibits.
To achieve product differentiation at such a low price,it is hard to be profitable during a hot
Competition with rivals. The major avenues to achieve a competitive advantage are normally based on lowers costs. Considering low-cost strategy, Walmart set a great example in low-cost provider strategy. Achieved a huge low -cost advantage among supermarkets chains. Honestly, when we reviewed. their operation goals, they are not simply focus on minimize their costs and expenses ,but to optimize the product the mix and gain the better sales turnover. Besides this, Walmart improved the security ,lower down the real estate rental and leasing rates. With the strategy we mentioned above, Walmart stayed a growth development and low-cost leadership .
Although Southwest took the leader position as the domestic Airlines, It also faced the challenge and threatens. while they gained the opportunities and cost-saving advantages. Firstly, they are easily to be succeed ,if they only focus on the low-cost strategy. Other corporations may flight for the market share .
Causing the only aircrafts are used in operation ,Southwest canceled 4 percent of its flights and grounded 44 planes for the required inspection.If the producers of Boeing changed the production plans or bankruptcy during operations. Obviously, Southwest Airlines would be attacked by that situation .Once the aircrafts get damaged or need to be replaced , the overused aircrafts faced a dilemma situation—it is hardly to be perfectly solved .If we assume that Boeing runs well ,as the price of materials raised , the aircrafts’ price will be increased without any doubt. Southwest Airlines have no choice but to pay the premium-price. As the Airlines service improved rapidly, the high-ways and other transportation also get well-developed .The strategy to grab passengers from Toyota and Ford may not get succeed, it definitely will caused passengers loss during a fierce struggle. What is more , the fanatical statement of Southwest Airlines is not in a good status recently. The total cost for each available seat-mile increased gradually from 1995 to 2013 which is illustrated in exhibit 9. From the expense category, the rising fuel and oil contributed most, since 2.4 in year 1995, it is more than 4 times in 2013. As time goes by, the wages and incomes which paid to employees also raised dramatically. Because all of the raised expenses mentioned above, it is much more difficult to stick their low-cost strategy .As the economy developed rapidly ,our living condition get largely improved as well .Customers may tend to choose a more comfortable and time-saving Airlines ,especially among time-saving passengers. If the volume of passengers sharply decreased , obviously the operation revenue will not be in a good condition, the fixed costs could not be cut down immediately. Even though the frequency of airlines decreased ,they have to pay the necessary price for keeping operation of the whole corporation. The education level also limited the passengers’ demanding. A low-price airlines may attract massive price-sensitive passengers who received less education . When people defined that Southwest Airlines is only served for the price-sensitive person ,it may result in qualified passengers losing. Southwest Airlines put a large amount money in advertising for attaining market share .Since the space get crowded ,the margin of advertising input is less than before. They are more likely to less attractive among so many competitive rivals ,buyers have too many substantial products or services. So they may replaced by the incoming competitors.
The Acquisition between AirTran and Southwest is a successful strategy. Since the same value —the low-cost strategy, it would be more easily for the latter operation. Apart from the same strategy ,both of them are using Boeing 737, while it is perfectly match for saving maintenance and training costs. Not likely the pure low-price airlines, the AirTran’s fare structure contained business class fares and priced economy class fares. And they offered additional services, refund class fares and change seats selection are also included. For the advanced passengers ,they deserved boarding in priority, and choose their seats in advance. With so many additional benefits ,it is much easier to attract new customers. Airtrans could enlarge the operating expansion, for the long-run, continuing the domestic operation is unrealistic .Southwest airlines need to be generated its product line and updated its service. So it have to expand its airlines market , to explore a larger space for more profitable projects. Sooner or latter ,the broader markets outside of the United States would be the major market.
For strengthen the managers working position and better the business performance, Low-cost strategy was not suitable for the current situation .We need to created more differentiating features. Towards to the differentiatation strategy, it is may easily and quickly copied by other competitors. Although we put massive input in marketing strategy,it may leads to variety of
When we eager to pursue a highly-profit project, it is definitely required the higher costs and expense. As the costs raised, it is hardly to sustain the original tickets price.The tickets price we charge for is not equal to our total inputs.Airlines exploration massively in a short period will contribute to a heavy burden for Southwest Airlines.How to sustain the stable cash flow ?What is the preferable measures to control such a huge corporate? For lack of sustained incomes and revenues, the new created corporation may get bankruptcy eventually. The amount of total costs and expenses could not be ignored when we counted our profits. So choose the profitable programs,and saving the costs wisely. Considering air tans mergers into Southwest Airlines, the majority of employees would be served for Southwest as well. Although the two companies have some common strategies. It’s hard to say the employees will fully immersed in the new woring q Towards to the differentiation strategy, it is may easily and quickly copied by other competitors. Although we put massive input in marketing strategy, it may leads to variety of issues. Specifically, with more creation inputs ,and gained less than before. On the respective of shareholders and executives, the ratio of Return on investors is not achieve their idea level .For operating excellence and earning higher profits, they will take many into consideration.
When we eager to pursue a highly-profit project, it is definitely required the higher costs and expense. As the costs raised, it is hardly to sustain the original tickets price. The tickets price we charge for is not equal to our total inputs. Airlines exploration massively in a short period will contribute to a heavy burden for Southwest Airlines. How to sustain the stable cash flow ?What is the preferable measures to control such a huge corporate? For lack of sustained incomes and revenues, the new created corporation may get bankruptcy eventually. The amount of total costs and expenses could not be ignored when we counted our profits. So choose the profitable programs, and saving the costs wisely. Considering air tans mergers into Southwest Airlines, the majority of employees would be served for Southwest as well. Although the two companies have some common strategies. It’s hard to say the employees will fully immersed in the new working environment. So the leadership of the executive director matters most. Normally, the failure strategy is because of a terrible execution. Improving the executive ability, could contribute a well performance in executive operations.