Corporate strategy plays an important role
For an organisation, the corporate strategy plays an important role to achieve organisational goals and objectives. The corporate strategy is so much important for an organisation, as if the company should decide to enhance its market strength. In this detailed study, the learner would discuss over the various aspects refers to the analysis of corporate strategy. The learner would discuss various corporate strategic models in the context of Southwest Airline. The Southwest Airline has started its journey in the year of 1971 with three Boeing Aircrafts in three cities Texas notably Houston, Dallas, and San Antonio. The aircraft has expanded its business in USA also in the global market and now one of the largest aircraft organisation in USA and top-rated aircraft in the global market. In this detailed study, the learner would describe about the current corporate strategy of Southwest Airline organisation in USA by analysing its business strategy based on various strategic models (Southwest.com, 2018).
A favourable economic environment is surrounding southwest Airlines. In the domestic market, the response of the organisation is excellent. This endeavours the organisation in fulfilling their mission of transporting the passengers at the most reduced rates, which will favour the customers (Giurgiu and Borza 2015). It is being observed that the organisation has maintained a constant profit for last forty years.
Southwest Airlines have a good interaction as well as high reputation with their clients, customers as well as suppliers. They also engage themselves within the community social relations and through parties. The company is having well established cultural background with the people they are dealing with (Chen and Pawlikowski 2015). It also has a training centre where they provide education to the people regarding activities of airlines.
In the recent time, the organisation has upgraded their technological advancements in their current systems by integrating the technology within their system. They have upgraded by introducing bookings, route paths and company itinerary that are available through online. In 2005 the organisation also introduced the downloadable tools which constantly notify their customers about the offers as well as promotions of the services that the company is providing (Myre 2015).
Southwest Airlines engaged themselves in the sustainable form for utilising fuel, and they also sustainably monitor their resources. In recent time, the organisation made a contract with Pratt and Whitney for providing them the supply of washing system of Eco-power pressure water (Chen and Pawlikowski 2015). These steps are implemented by the organisation making them an eco-friendly organisation.
The company has a legal issue regarding Wright Amendment and this blocks the turn-around flights number for the organisation. This Amendment restricts the organisation in providing more serves to their customers, and this further affects their revenue earnings.
Barriers to Entry
The organisation is confronting high barriers to make their entry in the international market. Legal issues like Wright amendment force the organisation to face this barrier. The factor of merging of other big organisation also makes Southwest Airlines in facing challenges. The merging of other companies lead to the loss in market share of Southwest Airlines (Moreno-Izquierdo et al. 2016).
Available of Substitutes:
Substitute like transport through rail path is not that popular within the people as this mode of transport is not readily accessible. Transport through bus route will not be avail by the clientele who avail the airline services. The clients who travel through airline services frequently need to travel within a short periods of time, and thus they will not avail the bus routes. Therefore, availability of alternative is not the concern for the organisation (Rothaermel 2016).
Organisational capability in meeting the market demand is very high. Southwest Airlines meet the demand of the suppliers excellently. Southwest Airlines services the large aircraft fleet that is highly suited for passenger transportation and they have a very low rate for cancellation of flight services (Moreno-Izquierdo et al. 2016).
Customer’s power has decreased as the organisational capability of managing the flights enhanced. Moreover, the organisation is having highly efficient route for meeting the market demand within the appropriate time frame (Rothaermel 2016).
The organisation is confronting high competition from the other airline organisations. As the other organisations are implementing the policy of merging, therefore, the market environment have become highly competitive. Therefore, Southwest Airlines need to develop good strategy of marketing Organisation like US Airways, Delta and American Airlines have implemented acquisition and merging for dominating the market and this possesses high threat for Southwest Airlines (Moreno-Izquierdo et al. 2016).
Gap Analysis – Comparison of actual performance with potential or desired performance
The chosen organisation is one of the largest airline organisations in USA that provides low-cost air travel services to the travellers. As per the mission statement of this organisation, it has targeted to provide the best and comfortable airline services to the people or traveller of USA. The organisation has expanded its business in 58 cities of USA with having 59 airports. At the end of the year, the organisation has earned $241 million as net income and has carried more than 63 million passengers in US. With the change in the time, the organisation has faced several social and economic challenges in the nature. As the organisation has targeted to serve best air travel services to its targeted customers or travellers, but the fact is due to change in the perception of travellers the organisation feels hard to maintain its market tuning (Southwest.com, 2018).
In past few years, the trend of airline services has been changed as per the perception or taste and preference of the customers. The customers are now demanding more luxurious journey from any of airline organisation and airline organisations are hence performing as per the requirements. The major gap Southwest Airline has faced in the market is the economic crisis. As per the internal analysis and external analysis in the above section, it has been analysed that the organisation has faced economic loss of 16.1% at the end of the year 2012. The gap that has been analysed from the above discussion is the organisation has planned to develop its market in the international market, but due to tough competition, the organisation has failed to achieve its target (Goetzand Sutton, 2017).
Boston Matrix Analysis – Growth
As per the Boston matrix, the organisation is now at the position where the organisation has enough cash to invest, but it has limited usage. As per the above discussion, it has been articulated that the organisation has good as well as capable financial strength in the market, but as per the purpose of the business, the organisation is limited by the usage of cash in the market. The organisation has targeted to invest in the international market, but as due to lack of sources and tough competition level the organisation is feeling market pressure that has affected the corporate strategy as well. As per the recent corporate strategy, Southwest Airline has targeted to expand its business in the international market. As per the SWOT analysis, it has been articulated that the organisation has enough market opportunity for future expansion. The organisation might go with merger and expand its airline business or market in the international market. It has also been seen that due to merger in the year of 2012 with a small sector organisation the company has faced economic loss. Along with this, it has also been measured that the organisation is hesitating to invest in the market for further expansion as it will directly affect the low-cost strategy of the business that might cause to lose existed customers.
As per the Ansoff matrix, it has been interpreted that the organisation Southwest Airline is now at the market penetration position, according to which the organisation has enough growth with existing product and market. From the PESTLE and SWOT analysis, it has been articulated that the organisation has targeted the product development stage by extending the business in the international market. It has been deduced from the discussion that, the organisation has enough market opportunity to expand its business but similarly the organisation needed to maintain its mission statement by providing fair cost to travellers (Lohmannand Spasojevic, 2018). It is being assumed that the organisation might go with
product development stage, but it might affect its low-cost strategy in the market. Thus, the organisation should provide valid cause or reason to its customers regarding price change in the market. If the organisation will go transparent with its customers regarding price change, then it might get positive support from its targeted customers as well as existed customers also will get support to survive in the market with positive concern and corporate strategy.
The RBV theory has been derived from the perspective of the resource management of an organisation. As per the chosen organisation, Southwest Airline needs to focus over its resources for further development also to meet its future organisational goal in the targeted market. The RBV theory has been categorised into several sections under which the resources has been divided into two parts tangible and intangible (Kangand Hansen, 2017). Based over the first classification further VRIO has been defined under this Model that has stated that the organisation needed to focus over its Value, Rarity, Imitability and organisation so that the organisation Southwest Airline could achieve its organisational goal by managing its corporate strategy.
From the above discussion it has been deduced that, for an organisation, the corporate strategy plays an important role to achieve organisational goals and objectives. For an organisation, the corporate strategy is so much important as if the organisation had decided to enhance its market strength. In this detailed study, the learner had discussed over the various aspects refers to the analysis of corporate strategy. The learner has also added various corporate strategic models in the context of Southwest Airline to define the importance of corporate strategy for achieving organisation goals and objectives. As per the above discussion it has been articulated that, the aircraft organisation has targeted to expand its market in the international market but the fact is due to high level of competition and the mission of the business the organisation Southwest Airline still at the growth stage. The detailed study has defined that Southwest Airline needs to develop its corporate strategy.
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