Introduction
As one of the largest low-cost aircraft carriers, Southwest Airlines is renowned for its high efficiency and unique approach to customer service. However, it does not mean that the company does not need to constantly assess the actions of its competitors and trends among its customer base. Nowadays, Southwest needs to revise its strategy to stay relevant on the market in the long term. This essay identifies several possible business strategies that may allow the company to keep its competitive advantage and explains which one is the most suitable.
Strategy Identification
Southwest Airlines was able to follow the market trends so far with immense success. However, there are times when new developments in the industry make changes essential for a company that wants to preserve its competitive advantage. One of the most apparent business strategies for Southwest is to consider expanding to new destinations. So far, this approach is the primary source of new customers and increased operating profits for the company, as it continues its expansion almost continuously (Levine-Weinberg, 2021). The benefits of this strategy also include a wider variety of potential partners across the globe. However, as the company enters the international market, more regulations will affect its profitability. Moreover, some destinations may become unpopular due to the event outside of Southwest’s influence, such as through political fluctuations.
Another possible change is the switch from using Boeing planes only. It is worth noting that Southwest experiences many benefits from the current deal, as it does not have to train its pilots to operate different planes or buy parts from varied manufacturers (Inkpen, 2017). There are several issues with this notion, and the most prominent is the burgeoning power of a supplier that allows Boeing to make Southwest utterly dependent on its decisions. Diversification is a vital part of modern business strategies, as it decreases risks from partnerships.
The third option for the company is to add more services into its scope of business. For example, Southwest can begin to use its destinations to provide cargo services. This move will allow the firm to increase the number of its customers and operational profits significantly. However, there is an issue with the fact that the company’s planes are specifically equipped to provide the essential minimum that Southwest decided upon.
Most Viable Strategy
While the company focuses on expansion and experiments with new services, there are long-term harmful effects of an overextended partnership with a single plane manufacturer that must be considered detrimental. An increasing burgeoning power allows Boeing to control the prices of new planes and their parts. There is evidence of growing issues inside Boeing, as the firm has recently exhibited concerning behavior regarding aviation safety certification (Josephs, 2019). It also gives Southwest Airlines less space to experiment and introduce new services, such as cargo flights or luxury seats. Therefore, fleet diversification appears to be the most viable strategy in the long run.
Conclusion
In conclusion, Southwest Airlines needs to consider new options, such as new partnerships, destinations, and services. Many choices provide a viable addition to the company’s current business strategy, as they are intended to diversify its product. However, new planes from a different manufacturer appear to be the most suitable choice of approach, as Boeing has accumulated an excessive amount of burgeoning power over Southwest and has recently shown problematic behavior (Josephs, 2019). The company will benefit greatly from this move in the long run.
References
Inkpen, A. (2017). Southwest Airlines. Thunderbird: School of Global Management.
Josephs, L. (2019). Southwest reaches deal with Boeing over 737 Max, plans to share $125 million with employees. CNBC. Web.
Levine-Weinberg, A. (2021). Southwest Airlines keeps expanding to new cities. The Motley Fool. Web.