Southwest Airline's Continue to be a Best-Cost Provider Southwest Airline's needs to continue with their best-cost provider competitive strategy of low-cost flights and differentiation gives them an advantage over their competition. This will be achieved by continuing the strategy of being a low-fare, low-cost airline and differentiating from their competition such as promoting "bags fly free". They are able to keep the prices down for there customers by keeping operational costs down which will be discussed further in another recommendation.
Southwest also differentiates itself form their competition by having excellent customer service. They need to continue to be the best in categories such as: best on-time record, best baggage handling, and fewest customer complaints; which helped Southwest win more industry Triple Crown Awards than there competition. Stay Focused on Low Operational Costs that will Help Promote Future Growth Southwest is able to keep their overall ticket prices lower than competitors because they are very efficient.Southwest needs to continue to keep one of the lowest operational costs This can be achieved by keeping winglets on all aircrafts to educe lift drag, allow aircraft to climb more steeply and reach higher flight levels quicker, which helps extend engine life as well as reducing maintenance costs and fuel burned. Southwest can also continue to curtail flights on marginally profitable routs where numerous seats often went unfilled and shifting planes to routes with good growth opportunities.
One of these growth opportunities that Southwest practices is adding flights in areas where rivals are cutting back their services.This has allowed Southwest to attract more passengers who might not have tried their revise and help them fall in love with the best services that Southwest has been proven to provide. Another growth opportunity that Southwest has created is gradual expansion into new geographic markets by adding one or two new cities to its rout annually. This has kept Southwest's debt down because they are able to finance these operations from mostly cash. Southwest needs to stay efficient and continue to keep operational costs down so they can continue to gradually expand.
Continue to Encourage a Strong Company Culture Since the incorporation of Southwest Airlines in 1967, competitors have savored of their business concept: "attract passengers by flying convenient schedules, get passengers to their destinations on time, make sure they have a good experience, and charge fares competitive with travel by automobile". The first four years many competitors took Southwest Airlines to court, trying to block the new airline from starting operations and costing them a lot of money. Herb Keller led the fight and won. Southwest has been fighting to survive in the airline industry since incorporation.
This has grown on management and each employee. When Keller was asked bout what created Southwest's culture he stated, "The warrior mentality, the very fight to survive, is truly what created our culture" (p. 280). Southwest is also unique to many other organizations during the hiring process.
They look for employees who have the warrior spirit, people who will fight to win who also have a Fun-Liking attitude. They might not hire the employee with the best skills because Southwest believes they can train employees to give them the skills they need but they cannot change their attitudes.Southwest needs to continue hiring employees that match heir company's beliefs to keep turnover rates down. Another unique cultural strategy Southwest's belief to put their employees first. Also, Southwest has a no-layoff policy that helps ensure employee Job security.
Southwest management is also required to walk around one-third of their time observing firsthand what is going on and listening to employees needs. Southwest needs to continue to put employees first and have great management to keep employees happy who in turn are likely to have better customer service and keep their customers happy as well.Analyze Rattan's Company Culture for Weaknesses Since Southwest Airlines puts such an importance on company culture, I believe they need to evaluate Rattan's current company culture for weaknesses. Even though Raritan has the same strategy of being a low-fare, low-cost airline, they probably do not have the same values and culture as Southwest. Also, Just because Rattan's culture is different from Southwest's doesn't make it wrong.
I do not think Southwest should go in and change Rattan's culture to be the same as there's because the changes might upset too many employees, causing them to leave and rive up the turnover rate.I think minor changes to Rattan's company culture could be made over an expanded period of time, to improve their company culture and better serve their employees. Ensure that Gary Kelly Stays Focused on Commitment to Performance Previous CEO, Keller, emphasized a strong commitment to Southwest's performance. Before Gary Kelly took over as CEO, he followed Keller around to try and learn how the company was successfully run. The board believes that Kelly will make an excellent CEO with one of his strategic objectives as "to be the safest, most efficient, and most reliable airline in the world.
This is a reaching objective because Southwest only has domestic flights in the United States. Kelly needs to be careful of expanding too quickly and taking the company too far into debt especially with the addition of Raritan. Some are worried that Kelly is to focused on the financial and not as focused on employees and customer service. Kelly needs to continue to emphasize Southwest's commitment to performance and not stray to far from Southwest's current company strategies and cultures.
