Quality Strategies and Deployment
University of phoenix
June 24, 2019
Southwest Airlines key policies are to be a low-cost airline, charging their customer low fares, providing more daily frequent flights, and growing its business by adding new cities and airports to its route schedule (Thompson, 2018). It low-cost strategy of success was attributed to three main components use a single aircraft type to be used for all flights, a point to point route, and perform all value chain activities, along with it fuel hedge (Thompson, 2018). Southwest Airlines was one of the first company’s in the United States to establish a fuel heading and derivative contract offsetting the rise of gas prices, saving the company billions (Carter, Rogers, & Simkins, 2004). This supported the company to remain profitable even when its competitors could not.
Southwest Airlines operating practices was one of efficiency. Southwest Airlines on a regular basis upgraded it management information systems to increase the speed at which data was deliver, keep cost low, and improve its customer service (George, 2015). Southwest Airlines core values included LUV and fun. LUV meant treating its customers and employees with respect and dignity while showing caring and loving treatment to all (Thompson, 2018). And fun meant having fun while working as the word implies. Its culture included a culture of keeping products and processes simple so customers can choose the fare they preferred simply (Thompson, 2018). Processes to control costs, providing the highest quality customer service, and invested in next generation technology and software to upgrade to a tickles system, accounting, payroll, and human resource systems (Thompson, 2018). It core values aimed at supporting its low cost/no-frills strategy.
The key elements of Southwest’s culture were one of quality and it starts with its “employees come first and customers come second” (Thompson, 2018). They wanted employees working for them that were passionate about their jobs and happy at work because in turn they would keep their customers happy (Smith, 2004). As mentioned in the previous question Southwest airlines culture was one that was one of simple procedures and innovation. Furthermore, it was a culture of open communication and an involvement at every level from the top to the bottom. The company deploys a strong culture with the number one priority of keeping their employees happy by empowering them to do what is needed to support customer needs , take on a warrior spirt (Makovsky, 2013). A strong culture of following the golden rule, “treat others respect”, wear the servant heart (Makovsky, 2013). And a culture of fun-luving attitude, with employees who do not take themselves to seriously and proud to work for the company (Makovsky, 2013).
The culture will be part of the culture remain and parts that will change. Every new leader brings with them new ideas as has Gary Kelly an initiate to focus on number one performance, then people, and planet (Thompson, 2018). New controls will be put in place to meet the new business objectives of rapid growth under Gary Kelly’s leadership. The problem I foresee is the acceptance of Kelly’s new rapid grow initiatives and the culture changes needed in order to successfully implement these initiatives (Cameron, 2008). In the first ten years of Kelly’s leadership as CEO he revamped the frequent flier program, focused on business travelers, expanded to big cities, sustained rapid growth to surpassed it competitors for domestic passengers onboard, and expanded into to international destination (Mutzabaugh, 2014). Industry observers have noticed as the company gets larger it is showing signs of distress and employees are not as happy as they use to be history (Mutzabaugh, 2014)
The policy I see re-surfacing overtime and causing issues for Southwest is it heading and derivatives fuel contracts. In late 2008 and 2009 when fuel prices decline Southwest lost millions of dollars. I suggest Southwest adopt a more conservative hedging strategy. Another issue is it reliance on fuel, I suggest Southwest look for alternatives minimize and/or eliminate its need for fuel energy (Hampstead, 2019). The solution I suggest is that Southwest transition and minimize or eliminate its fuel consumption need to a more energy efficient method. In Southwest mission and vision statement its triple bottom-line commits to performance, people and plant (Thompson, 2018). For the plant Southwest strives to be an industry leader that conserves natural resources (Thompson, 2018). Airlines in the industry are using engines that need half the amount of fuel per passenger, have electric engines or battery operating engines, and using biofuels as an alternative fossil fuel and emit up to eighty-percent less carbon (Abdalla, 2018).
Moving from an administrative business to a competitive company requires strategy. Identifying the company’s strategy within the business, market, and industry allows the company to innovate and advance. An effective strategy should be composed of objective, scope, and advantage. These three elements can be elaborated on and defined according to the company, and the company will distinguish itself and set itself apart according to how they identify the strategy and take action on it. Beyond identifying the current state of the organization and its place within the business, market, and industry, the forward-looking element called advantage, is crucial to the company’s success over its competition. The advantage element works backwards to the other elements and supports them and reshapes them. For instance, by implementing a distributive innovation, the company’s objective can be changed to align with the innovation and employees can better understand their role in helping to reach the company’s objective.
Southwest Airlines is unique because its strategy and utilization of operational effectiveness is very similar if not completely the same indicators of the company’s intentions and ambitions within the industry and market. The blending of strategy and utilization of operational effectiveness introduces a new concept of competitive strategy. The different activities chosen to differentiate a company from its competitors in competitive strategy will deliver a company-specific set of value (Porter, 1996). Southwest Airlines’ long-term strategy is to tailor-make a unique set of short-term activities that will maintain its reputation to deliver low-cost, convenient service to its customers. A couple of these activities include the limitation of flights to short distances and to fly only between midsize cities and secondary airports in large cities (Porter, 1996). Southwest Airlines has managed to implement organizational innovations and technological innovations on a continuous basis while maintaining its stake in the market. Their competitive advantage strategy exists both in a red ocean because it competes within the same industry and market as its competition and in a blue ocean because it disrupts the industry and market through innovation.
The airline industry has risks that are much greater than other industries because of its vulnerability to the global economic system, political upheavals, terrorist activity, wars, and public health (Clark, 2010). Operations in the airline industry are continuously pressed because of incredibly thin margins, rising costs, and a very high demand for exemplary customer service (Clark, 2010). The airline industry has become highly competitive due to the high risk circumstances afflicting the business, which creates the additional challenge to overcome the demand for low cost, further supported by the introduction of the online travel industry. One of Southwest Airlines main drivers for its success is low-cost, but the opportunity to find low-cost carriers based on the online travel industry might negatively impact their low-cost strategy. The ability and range of access for customers to find low-cost flights is pushing all airline companies to align their strategies with the low-cost driver. Southwest Airlines however is a company that has build its reputation on sustainability over a long- period of time, deeming itself as untouchable. The company’s most recent innovations include the mass introduction of 737–500 cost efficient airplanes and the acquisition of AirTran that indicate the perseverance to sustain itself through the next challenges facing the airline industry. One of the most compelling indicators of Southwest Airline’s perseverance is evident through another factor hitting companies across all industries, which is social media. As of June 2010, Southwest Airlines built a Twitter account with over 1 million followers (Clark, 2010). The emergence of social media reflects the clarity of Southwest Airlines’ high standards in conducting business and supports their customer expectations to be different, to become the maverick, and to lead the airline industry (Clark, 2010).
Capella University (Ed.). (2013). Crafting and executing strategy: Text and readings (19th ed.). New York, NY: McGraw-Hill.
Clark, P. (2010). Stormy Skies: Airlines in Crisis. Farnham, Surrey, GBR: Ashgate Publishing Ltd.
Collis, D. J., & Rukstad, M. G. (2008). Can you say what your strategy is?. Harvard Business Review, 86(4), 82–90.