Strategic Planning For Southwest Airlines: Analysis, Goals And Strategies

Analysis of Southwest Airlines

Describe about the Strategic Planning for Southwest Airlines.

Strategic planning is stated to be a way to organize and manage activity that is used to set priorities, focus energy and resources on a common goal. Employees and stakeholders are all on one accord during this planning process (Lahdesmaki, 2013). The literature suggests that Major elements of strategic planning include defining a vision and mission for a company along with creating goals with multiple levels including organization, department, individual, etc. The next steps are creating the plan to reach those goals and review how the plan is working along the way and edit as needed. (Daft, 2013, p. 208-10). The objective of this essay is to do the strategic analysis of Southwest Airlines. The company has been operating its flight across different parts of the world. Southwest is always changing and evolving in their industry.  Every organization has challenges in sustainability, maintains a positive and conducive culture, and implementing good leadership and management. Often people hear a wide range of things in the media about South West airline (Helsen & Lybaert, 2015). In some of their challenging times they have addressed those challenges and still are in existence.  I do agree that South West Airlines keeps their vision realistic. 

The success of Southwest Airlines depends a lot on the strategic planning of organization.  Some strategies in the action plans were to minimize turnover times at airports, not serve food, have open seating to speed up boarding time, and not charge for changes to tickets (Svensson & Padin, 2016). To improve customer service without raising fares the airline added more flights and didn’t charge for baggage. As the company reviewed the progress and appraised performance other opportunities were recognized and new goals were formulated.  As we learned in the classes, change is constant and so is the process of improvement (Michalski, 2014). Strategic planning for large, complex organizations can be challenging due to trends and the ever-changing market.

The management of Southwest Airlines has developed a lot of strategies and policies to manage the internal and the external environment of the firm. For example, a few of the things they have done that demonstrated their efforts correlated back to their mission and vision are; hedging fuel, luv campaign, and people first (Baker, 2013).  Their focus is on lower costs so they focused and were able to determine a way to deal with their number one expense (fuel) and keep the cost down through hedging.  Their campaigns are focused on love, people and respect (Heskett and Sasser, 2013).  The backstage operations of Southwest Airlines can be explained with the use of value chain of airline industry. This can be shown as:

Goals of Southwest Airlines

The Southwest case study reveals how the strategic planning helped made southwest from one of the small company to one of the dominant US domestic airline (Heskett, & Sasser, 2013). Southwest airlines reduced the fare rates to reach the people and take advantage of economy of scale. Fare rates were 60% lower than the average coach fare in the beginning. In late 2008, Southwest’s fares on short flights were as low as $49 and on longer flights as low as $89 with advance purchase (Basfirinci & Mitra, 2015).

The PESTLE analysis is a powerful tool to assess the external environment of the company. Australia is a developed country and the political factors are positive in the country (Rosemann & Brocke, 2015). The government of Australia has also supported the companies like Southwest to expand in the country as it creates employment opportunities in the country (Thomas, 2015). The economical and social factors are also positive in the country. SWA is an American airline. However, the company provides a tough competition to the local low cost airline of Australia like Qantas. The literature suggest that Businesses regardless of their type (private, government, not-for-profit), size or financial position all tend to rely on four basic functions to coordinate the business. Those four functions are operations, finance, human resources and marketing (Shani & Chalasani, 2013). It would be correct to say that Southwest Airlines has been able to manage all these functions in an effective manner. The management of SWA realized that change management is always difficult. Implementing change can be very challenging for all organizations and any size. Culture plays a bid part in implementation of change.  It is very important to communicate throughout each process.  Making sure all stakeholders are included (Kozubíková & Belas, 2015). Both internal and external.  I do agree that the more information provided on how the current trends influence the direction that is needed to be taken. When there is strategic planning everyone is working together for a common goal. The airlines had to put their heads together to ensure they are making the best choices for their company. These changes affect not only the consumers but the employees as well.

The literature also suggests that the organizations have to manage various internal and external risks (Coffie & Blankson, 2016). The internal and external risks are related to the various internal and external forces. The internal risks are related to the factors like employee motivation, internal culture of the company etc. The external risks are related to the factors like political, social, legal, economical, environmental and technological (Santos & Mathews, 2015). It is critical that the management of organizations should have a deep understanding of the internal and external risks.

Strategies and Action Plans of Southwest Airlines

I can understand how one might think that the most important part of the plan and is the accumulative impact of the activities undertaken by the organization, without a good vision and a good plan in place even the most effective execution would be useless (Weske, 2012). I believe that having the vision of what is possible and to see opportunities that are there and have the skills and equipment to take advantage of the situation in a timely fashion are all important. SWA vision was to “charge fares at all times that were below the cost of driving an automobile from one Texas City to another. (Later, in most of the airports in which Southwest initiated service, traffic on the routes it served increased three or four times (Heskett & Sasser, 2010, pg. 2). The method was for SWA to be competitive and enticing to the public. The vision was set. They now had to tailor their way of doing business to reach their goal of success. They made an effort to reduce turnaround time to ten minutes. SWA made their own rules therefore, they were “known for its contrarian approach to air transportation” (Heskett & Sasser, 2010, pg. 2). Implementation to create a “Servant’s Heart” and “Fun-LUVing attitudes” was not really seen within the airline industries; as a matter of fact the model was hardly used by any organization. The strategy to remain competitive was to network its self through code share. The strategy was set to “code share with ATA for the first time in Company history” Heskett & Sasser, 2010, pg. 7). Some of the challenges of such growth towards the company’s business were to develop it supporting technology. It had to reconsider many of its old paradigms on how it served its customers.

References

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